What Should You Do When Your Life Insurance Policy Lapses?

A lapsed policy is one in which all benefits to the policyholder have ceased and the policy has been terminated due to nonpayment of premiums on the due date or even after the grace period has expired. If the due premium is not paid during the grace period, the policy lapses, and all benefits and coverages offered under it are terminated.

When purchasing life insurance, you have the option of paying a premium at your leisure. The payment could be made once a year, twice a year, or once a month. Your policy will lapse if you are unable to pay the premium on time or if you do not intend to continue with the plan. 

According to the conditions of the policy, the insurance company will grant you a grace period of 15 or 30 days. In the case of quarterly, half-yearly, and yearly premium payment types, the grace period is 30 days. In the event of monthly payments, this period is 15 days. You have until the end of this period to pay the premium and renew your insurance. If you fail to do so, your policy will lapse and you will be without life insurance.

Situations Which May Arise Due To Policy Lapse

Here are a few situations that may arise due to policy lapse:

1. Lapsed Policy Revival/Reinstatement

The majority of insurance plans include a resurrection clause. If the insured decides to renew his or her expired policy, he or she can use this to 'revive' it.

For the life insurance plan to be reinstated, there is a procedure that must be followed. To begin, the insured must present proof of continuous insurability; these documents differ by insurer and are also dependent on the amount of time that has passed. Second, the insured must pay all outstanding premiums, as well as the revival charges, at the time of payment. 

Finally, the insured may be required to undergo a medical checkup if the insurance company deems it necessary. The insurance policy will go into effect with all of its original benefits once these conditions have been met.

2. Grace Comes First, Then Comes Lapse

Insurance companies understand that their customers may not always be able to pay their premiums on time. A grace period is included in almost every insurance policy.

It's worth noting that the insurance is still active during the grace period, so if the insured passes away, the nominee will still be eligible for benefits.

How Do You Get An Expired Insurance Policy To Come Back To Life?

When it comes to reactivating lapsed life insurance, there are two factors to keep in mind:

1. If you want to reinstate your insurance within six months of its expiration date, you must contact the insurer and pay the outstanding amount plus interest. 
2. To reinstate the coverage after a six-month lapse, you must pay the outstanding premium, interest, and penalty. The amount of the penalty is determined by the policy you have. The insurer has the last say on whether or not the insurance should be renewed. The insurance may require you to undergo a health examination or increase your premium.

Conclusion

A life insurance policy will not lapse as a result of a single missed payment. All life insurance companies have a grace period, which is usually approximately 30 days, during which your policy remains in force and gives you a cushion if you have to make a late payment. Given above in this article are a few things you can do to save your life insurance policy.

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