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Policy Revival Period in Insurance: A Complete Guide

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Policy Revival Period in Insurance: A Complete Guide
February 16, 2024

Table of Content

 

These days, with the growing uncertainties of life, it is immensely important to get yourself insured. A term life insurance plan with a good life cover ensures your family won’t have to cope with financial struggles if you die an untimely death. A life insurance plan needs you to pay premiums in a pre-defined schedule, against which the sum assured is paid to your nominee in the event of your death within the policy term. However, the availability of term policy benefits depends on whether you pay the premiums on time and complete the entire schedule.

A term policy requires the policyholder to pay the premiums in a chosen schedule of annual, half-yearly, quarterly or monthly payments. The premium has a due date on which the payment has to be made. Based on the payment, the policy gets renewed for the next phase. Here are some important points that need to be noted.

  • What happens when the premium is not paid on the due date?

The premium payments in a term policy have to be made on due dates as per schedule for a successful renewal. However, if the policyholder misses the expiry date, an extension is available. Beyond the window, the policy might lapse.

  • What is a grace period in a term policy?

A grace period in a term policy is the extended period available to pay the premium if you miss the due date. In an annual, half-yearly or quarterly premium payment schedule, the grace period is 30 days from the original due date. For a monthly schedule, it’s 15 days.

  • What happens when you default even in the grace period?

A grace period is an extra time available to pay the premium after the due date. If the policyholder fails to make the payment even in this window, he/she will bear the consequences. In some cases, the premium can still be paid along with late fees or a penalty. In the worst case, the policy might get cancelled.

  • What if you fail to renew the term policy on time?

A term policy offers you a pure life cover where the death benefit is paid in exchange for premiums. Hence, if you fail to renew on time, the policy gets cancelled and the life cover ceases to work. No death benefit is available anymore and the premiums already paid are not returned. It’s indeed a major loss when the policy is a Rs 1 crore term plan and you end up losing its benefits.

  • What is a revival of a lapsed term policy?

A revival of a lapsed policy means reinstating the term policy to get back the benefits. It is the process in which the policy gets back into operation even after default payment and cancellation. However, this remains a choice of the said insurance company based on its terms and conditions.

  • How can you revive a lapsed policy?

Some insurers allow the renewal of a lapsed policy. For this, a few documents like health certificates and KYC proofs have to be submitted. Also, certain fees are payable to revive a lapsed policy. The list includes late penalties, interests accrued for the default period and the payment of the outstanding amount of unpaid premiums. You might also face a new set of terms and conditions imposed by the insurer.

  • What is the revival period in life insurance?

A revival period in life insurance refers to the time band allowed by the insurance company to recover a lapsed policy. Typically, this period ranges between 3-5 years and varies across insurers. The start of the period is from the due date of the first unpaid premium.

  • How to avoid missing policy renewals?

You can avoid failing premium due dates or consequent policy lapse by maintaining payment through the following options:

  • Create a calendar for your premium payments and set an alert.

  • Set a standing instruction for your bank to deduct premiums through ECS.

  • Choose auto-pay options through your ATM card or UPI.

  • Choose a policy that’s easily affordable for you.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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