How to Revive the Lapsed Life Insurance Policy?
Who doesn’t go through a financial crunch? In such a condition, you may stop paying your life insurance premiums or decide to cancel it completely. But after getting back on track, you might consider reviving your lapsed policy to secure yourself. An insurance plan enables you to pay your past debts along with interest and regain the life cover. Here is all you need to know about recovering your lapsed policy and how to go about the process.
What Causes the Insurance Policy to Lapse?
When you buy an insurance policy, you choose a premium payment frequency as per your convenience. But policies lapse when you miss the payment date or choose to discontinue the insurance plan. In case you missed the date, the insurer gives you a grace period to repay the premium. This period depends on the payment frequency chosen by you and can consist of 15-30 days. If you are still not able to repay the premium, the policy lapses and you lose the life cover and benefits that come with the plan.
Can You Revive the Life Insurance Policy?
Yes, a lapsed insurance policy can be revived but this depends on the time period from the date on which the policy lapsed. If it has been over several months then the insurance company can refuse to revive the term insurance plan altogether. It could also depend on the type of life insurance policy you have bought to determine if the policy can be reinstated.
How to Revive the Lapsed Life Insurance Policy?
The chances of revival of a lapsed insurance plan vary according to the time period. Below is the cap on the time till which you can recover the plan:
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Revival of Policy within 6 Months from the Date of Lapse
If it’s been less than six months since the policy lapsed, you can easily revive the life insurance plan. This can be done by contacting your insurer and repaying the premiums and interest. Now, you have successfully recovered your plan and gained your life cover back.
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Revival of Policy after 6 Months from the Date of Lapse
In the case where it has been more than six months since your policy lapsed, it can be a difficult process. After the six month mark, the sole rights of allowing you to recover the term insurance plan depends on the insurer. If they want to discontinue the plan, they have the rights to do so. But if the insurance company approves the revival, you may have to bear the cost of hefty interest rates. The insurer could also demand a medical test to assess your current health conditions and charge pricey premiums.
Benefits after Reviving a Lapsed Policy
Usually, no benefits can be availed by a policyholder when a term plan lapses. But the status of life insurance benefits after recovering the plan needs to be discussed with your insurer. It entirely depends on the terms and conditions of the insurance company and needs to be known to you before getting an insurance plan.
