Life insurance: don’t let your insurance policy expire

If the premium is not paid when due, insurers grant a grace period which is 15 days if the premium is paid in monthly installments and 30 days if the premium is paid on a quarterly, semi-annual or annual basis.

While it is important to purchase a life insurance policy to provide for the financial needs of dependents in the event of the premature death of the policyholder, it is equally important to pay renewal premiums on time so that the policy does not expire. If a policy expires, not only will it not be able to get a claim, it will not even be able to revive it after a while.

Not renewing an insurance policy even during the grace period defeats the purpose of purchasing coverage. Insurers send letters and messages one month before a policy renewal expires. If the premium is not paid when due, insurers grant a grace period which is 15 days if the premium is paid in monthly installments and 30 days if the premium is paid on a quarterly, semi-annual or annual basis.

Grace period to expire
If the premium is not paid even during the grace period, the policy expires and all benefits covered by the policy are terminated. While some companies run special campaigns to revive lapsed policies, policyholders need to verify policy details and contact the insurer to revive a lapsed policy. A policy owner should note that the policy is still in effect during the grace period. Thus, should anything happen to the policyholder during this period, the nominee would still be eligible for claims and all other benefits associated with the terms and conditions of the policy.

In order to promote the sustainability of life insurance policies and to close the gap created by the exit of insurance agents in serving life insurance buyers, the insurance regulator has established standards according to whereby insurance companies allocate orphaned expired life insurance policies to individual insurance agents whose registration is in Mandatory. The contact details of the agent would be communicated by the insurer to the policyholder concerned.

Revive the blanket
In life insurance, insurers provide a reinstatement period of two to five years to revive a policy. In fact, the guidelines of the Insurance Regulatory and Development Authority state that all life insurance policies written before 2019 will have a maximum replenishment period of two years and policies written after that will have a maximum replenishment period. five years and after which the policy will be terminated. . If the premium is not paid during the grace period and expires, the insured will no longer have any coverage and will not be eligible for any death benefit. However, if it is restored, the benefits will continue again.

A policyholder should read the document that outlines the criteria for reactivating the lapse policy and get in touch with the insurer. To reactivate an expired policy, the policyholder will need to sign a standard reactivation form, submit proof of continuing insurability, and may need to undergo a medical examination at a designated company medical center.

Once the company accepts the expired policy for trade-in, the policyholder will have to pay the premium for all years since the lapse of the policy as well as interest on unpaid premiums, applicable taxes and even the amount of the policy. penalty for non-payment of premiums. The renewed policy may have new terms and conditions.

While you may want to think about buying a new policy instead of reviving the expired policy, note that the premium for a new policy will be much higher than the old one due to the change in age and condition. health of the insured. In addition, the policyholder will not get the bonus accumulated in the lapse policy.

Ideally, to pay the renewal premium, the insured should establish standing instructions in a bank for electronic clearing services. This will ensure that life insurance premiums are paid on time and that policies do not expire.

Do you know what it is? FE Knowledge Desk explains each of these and in more detail on Financial Express Explained. Also get live BSE / NSE stock quotes, latest mutual fund net asset value, top equity funds, top winners, top losers on Financial Express. Don’t forget to try our free income tax calculator.

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.

Source link


About Author

Comments are closed.