Missed your policy premium payment? No stress, here’s what you need to do
June 28, 2017 . 255 views
However, just taking a policy is not enough, you must ensure that you stick to the plan, which means paying your insurance premium on time so that your policy remains active.
Typically, a life insurance premium is the amount you need to shell out once a year (in some cases this can be monthly). But you’ve got to be aware that if you miss the periodic premium payment, your policy coverage may lapse causing you to lose your initial investment as well.
Your life insurer typically sends you a reminder for payment of premium so it’s rather difficult to miss the premium payments on your policy.
After that, as a policyholder you are given a grace period ranging from 15 days to 30 days, during which the life insurance cover remains active and you can make the premium payment.
If, however, for some godforsaken reason you end up missing that, here’s what you need to know.
What happens to your life cover? During the grace period your life cover and other benefits will be available. But if the premium is not paid within the grace period, your policy will lapse, which means the protection will come to an end. Further, the money which was paid as premium will be forfeited. There are certain policies that acquire a surrender value, which they pay out if you have paid your premiums continuously for three years on a premium paying term of more than 10 years. However, you do not benefit from anything else.
Can you revive a policy? If you do not want to forgo the benefits which the insurance policy offers, you can consider reviving the life insurance policy within the stated time period laid down by the insurance company. This comes with conditions, though – LIC of India, for instance allows for ordinary revival under which if you revive your policy within 6 months from the due of first unpaid premium, you don’t require a health statement and your policy is revived on payment of delayed premium, plus interest. In some cases you are also allowed to renew your policy upto a period of 2 years by payment of the accumulated premiums with interest and a revival fee accompanied by a personal statement of health.
If you wish to revive a policy, now may be a good time to do it considering many companies are throwing in some freebies like a discount on interest as well as rebate on revival fee.
Best ways to avoid missing your premium payment
(i) Keep track of the date regarding your premium payments. Put your smartphone to some good use, set a reminder well in advance of your due date. If you tend to ignore reminders, ask mom to remind you.
(ii) Opt for automatic ECS to deduct the premium from your bank account on or before the due date
(iii) Take advantage of the grace period incase you missed the premium payment on time
(iv)Opt for a policy coverage that you can afford. If you are unable to pay the premium periodically because you cannot afford it, then it is not the right plan for you. A life insurance policy must take into account the inflow and outflow of your income.
Get unlimited investment tips.