Guide to Revive Lapsed Life Insurance Policy

Life insurance comes into play when the insured pays a specific amount of premium for a fixed period to ensure the financial security of the family post the insured’s death. A life insurance policy needs to be renewed or revived periodically, generally every year, to keep the coverage active. Imagine there is some dire financial situation in your life, and you are unable to pay your life insurance premium at the due date, then what? Did you know in this unfortunate situation, your life insurance policy lapses, despite you having paid all the earlier premiums regularly? All the policy benefits get nullified, be it the sum assured or the death benefit.

If your life insurance policy lapses, insurance companies offer the following assistance: 

Grace Period:

st and foremost, you should know that most insurance providers offer a grace period post your premium due date. Insurers understand that you may sometimes miss the deadline, and therefore, offer you a chance to pay your premium during this grace period to ensure your life insurance policy remains active. Further, if the insured dies during the grace period of the insurance policy, the nominees will still be eligible to claim the death benefit. Basically, the life insurance policy benefits remain active through the grace period.

Extended Revival Period:

If the nominee or the insured doesn’t pay the premium during the grace period, then the insurance policy lapses. However, some insurance companies offer you the chance to revive even a lapsed insurance policy, till a pre-determined period from the date of policy termination. This date is clearly specified by the life insurance company and is available only for certain types of policies. 

The steps involved to revive a lapsed life insurance policy are stated as below: 

Contact the life insurance company

The first step towards revival is to contact the insurance provider. Inform them of your decision to revive the life insurance policy and fill in the requisite documents to proceed further. During this step, you will be informed of the revival quote or amount that you would need to pay. The applicable amount will include all the premiums due on the insurance policy.

Pay the outstanding premium amounts

As a thumb rule, the grace period offered by life insurance companies is 30 days. If you pay the outstanding dues during this period, you are most likely not required to pay any penalties. If you make the payment later than the grace period, but lesser than six months, you have to pay the outstanding premiums, along with interest incurred on them, to revive your insurance policy lapse.
If the payment is made post six months, then along with the interest and premiums; you would most likely be liable to pay a late fee or penalty. This penalty is often termed as the revival penalty.

Medical test

The life insurance policy premium is primarily determined by one’s health and age. Post an insurance policy lapse, you may have to provide a declaration of good health. If the insurance policy is revived within six months, you would most likely not be subjected to any medical tests. However, if the same occurs post six months, you may have to undergo a health check-up at your own expense.
At times, you may be mandated by the insurance provider to undergo a check-up if you have a medical history or a pre-existing condition.   

There are many options available when you revive a lapsed insurance policy. 

1. You may follow the above steps for revival. 
2. You may pay the surrender amount and obtain the fund value of your life insurance policy. 
3. Alternatively, if you have religiously paid your premiums on time for three years, your insurance policy may not completely die, and you would be eligible for a lower sum assured value.

It is always preferable to pay your premiums on time and ensure your life insurance is valid throughout the term so you can avail all the benefits it has to offer.