Some Ways To Ensure Your Life Insurance Policy Does Not Lapse

Reason Why Your Life Insurance Policy May Lapse And Ways To Prevent It
Conclusion

Life insurance is a life insurance policy that offers financial assistance to your family in the event of your death. For instance, when you purchase a life insurance plan from an insurance company, the insurer provides you with a life cover in the form of a death benefit, which is essentially a certain specified sum of money. This sum of money will be paid out to your nominees/beneficiaries in the event of your death. In exchange for the life cover benefit, you are required to make periodic payments to the insurer in the form of a life insurance premium.

Life insurance policies typically provide you with a life cover only for a specific period, beyond which the policy would cease to offer you any benefits. That said, here is something that you should note. The death benefit in a life insurance plan will be paid out to your beneficiaries/nominees only in the event of your death during the policy tenure. And since such a plan only offers a death benefit, the life insurance premium is usually low when compared with other more traditional forms of life insurance.

Reason Why Your Life Insurance Policy May Lapse And Ways To Prevent It

Nonpayment of premiums is the primary reason why a life insurance policy lapses. It is extremely essential to continue paying your life insurance premiums throughout the tenure of the policy to ensure that you and your family stay protected. That said, your policy would not lapse the second you miss paying a premium. Usually, the insurance company gives you 30-days (15 days for monthly mode) grace period from the life insurance premium payment due date.

You can still keep your policy active by paying the premium within the grace period. If you miss paying the premium within the stipulated grace period, only then will your policy lapse. Once your policy has lapsed, you cease to enjoy any benefits offered by the life insurance plan.

Nevertheless, there are many ways to prevent your online life insurance policy from lapsing. Here is a quick look at some of the ways in which you can do so -

Ensure That You Pay Premiums On Time

This is obvious in itself. As long as you pay all of your premiums on time on or before the due date, there is zero chance for a life insurance policy to lapse.

Set Up An Auto Pay Facility Or A Standing Instruction

If you find it hard to make premium payments on time or have trouble remembering the due dates, it is a good idea to set up an auto pay facility or a standing instruction with your bank. Setting up such a process is extremely simple, takes very little time, and in most cases can be done online through your net banking facility itself. Once you have set up the facility, the bank will automatically make the premium payments for you regularly on the specified day without requiring any manual intervention.

Always Make Sure To Update Your Communication Details

If you ever change your phone number, your email ID, or your address, always make sure to let your insurer know. This way, you can reduce the chances of missing premium payment reminders.

Conclusion

Despite following the above-mentioned ways, if you ever find yourself with a lapsed policy, do not worry. As per IRDAI regulations, an insured can revive his lapsed policy during the revival period as stipulated in the regulations. That said, your insurer might ask you to make all the missed premium payments along with a penalty and complete the necessary formalities to revive your lapsed policy.