If you have an insurance policy, you must pay regular premiums to keep the coverage active. If you stop paying premiums, the coverage will lapse, and you will be uninsured. This could leave you vulnerable to high medical costs if you are diagnosed with any disease in the future. In the case of term plans, no amount will be paid to your family in case of your unfortunate demise. Therefore, it is important to know what a lapsed policy means and avoid the policy from getting lapsed.
A policy lapses when a life insurance policy is no longer active. It may lapse for a variety of reasons, but the most common reason is non payment of premium. If you do not make the payments within the grace period, the policy will lapse.
It occurs when a life insurance policy expires without being renewed or converted to another type of policy. In the case of your unfortunate demise, the lapsed policy will not pay the death benefit.
If you allow your insurance policy to lapse, it will be cancelled. You will then lose any coverage and will not be able to make any future claims on the policy. In some cases, the policy may be reinstated if you pay back all of the premiums that you have missed. However, the coverage will usually be reduced, and you may end up paying a higher premium.
A lapsed state means:
It is possible to revive a lapsed policy, although the conditions for doing so vary by the insurance company. In some cases, the insurance company may require that the policyholder submit proof of insurability.
Most insurers permit a grace period within which you can pay and revive your insurance policy. This grace period is generally in line with the guidelines of the IRDAI and can also depend on the type of insurance plan that you have opted for.
However, the insurer may levy a penalty on the missed premiums before reinstating the cover. Once the missed premiums and penalty amounts are paid, the policy will be revived, and you may enjoy the standard benefits offered under the policy.
There are a few things you can do to revive a lapsed life insurance policy. The first thing you need to do is contact your life insurance company and let them know that you want to reinstate your policy. They will likely require you to submit a written request and may also require you to submit proof of good health.
Once you have submitted your request, the life insurance company will review your case and determine if they can reinstate your policy. Some steps that are routinely followed for reinstatement of lapsed policies:
1. Contact Your life insurance company
2. Review your policy documents
3. Determine if you need to submit a written request
4. Pay your overdue premiums
5. Start paying your current premiums on time
About 4.2% of all life insurance policies and 6.4% of term policies lapse yearly. These statistics can help us learn more about
The only way to avoid policy lapse is to pay the due premiums on time. You can use the simple ways given below to ensure that you deposit all insurance premiums on time:
There are a few other ways to avoid policy lapse in case you have to pay premiums at a defined frequency:
Insurance companies offer many methods of reinstatement for your lapsed policy. To avoid your policy from lapse in the first place and enjoy the benefits, you must maintain your premium payments. Understanding what a lapsed policy is and how to avoid it is important for policyholders to keep track of.
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If you do not pay your policy premium on time, your insurer will no longer be able to provide coverage for you. A late fee charge will be attached to your premium if you make a late payment.
A payment is lapsed when the terms of insurance are no longer active due to the policyholder failing to make the necessary payments to keep their policy active.
Usually, in the case of a lapsed life insurance policy, there is no provision for a lapsed policy refund.
A surrender value in insurance policies is an amount the insurance agency pays to a policyholder if they terminate the policy before it has matured.
Yes, a lapsed life insurance policy can be surrendered. If you choose to discontinue a lapsed policy and surrender it, you will get the surrender value, and the policy will be terminated.
A claim made under a lapsed life policy will only be given if the policy was reinstated after its initial lapsing.
