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Despite choosing the best possible insurance policies, there are times when people encounter unexpected situations that make them falter on premium payments. This can further lead to a bigger trouble of policy lapse if one fails to pay the premium even within the grace period. However, the insurance companies offer a second chance to revive the policy through a payment of late fees, so that the policyholder doesn’t lose his money.
A late payment charge is the penalty you need to pay to revive life insurance that has lapsed due to non-payment of premiums. The amount of this penalty varies across the insurance companies and is usually a significantly higher amount. Typically, it consists of all the outstanding premiums along with an applicable rate of interest added to the sum. One has to go through this ordeal to get his policy back in force so that he doesn’t lose the money already paid as premiums and the benefits and coverages offered by the policy. However, usually, a life insurance company allows the revival of a lapsed policy within the next five years only.
A life insurance premium payment has to be made on or within the due date, beyond which a grace period of up to a maximum of 30 days is available. If you don’t pay the premium within the grace period, even the policy gets lapsed with all claims turning invalid and all the benefits and coverages terminated. A late fee allows payment of the entire outstanding amount along with a penalty to revive the policy within a stipulated time frame.
There is no other way to avoid late fees and other penalties in life insurance than paying the premiums on time. To do that that you can avail of the following steps:
Take away
Late payment charges of course are a way to revive your lapsed policy even if you completely falter on your premium payment. However, you need to pay a considerably more price for that as well. So, it’s indeed wiser to pay the premium within the grace period offered by the insurer if you miss the original due date. Why go for a loss when you have a way out, right?
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