How to revive your lapsed insurance policy

When you buy an insurance policy, you have to pay a certain amount of premium every year till the policy term. If, due to some reason, you are unable to pay the due premium on time or within the grace period provided by the insurer, your policy lapses. However, there is an option to restore your lapsed policy and make it active again.

Let us take a look at how you can restore a lapsed insurance policy.

When you fail to pay the insurance premium, your policy gets transferred to a grace period of 30 days. During this period, the insurer is still accountable for paying the death benefit to the nominee, if a valid claim is filed. However, if the policyholder dies after the grace period gets over, no death benefit is paid to the nominee. This is because the policy gets lapsed or becomes inactive once the grace period is over.

If policyholders wants to re-activate their lapsed policy, they can do so through the process of reinstatement which works only when the policy grace period has ended and the contract between the policyholder and insurer is no longer valid.

Naval Goel, Founder & CEO, PolicyX.com said that reinstatement is the process of renewing the lapsed policy in the middle of the plan to resume effective coverage. The policy gets terminated due to the non-payment of the premium which can happen because of various reasons, either due to financial stress, investment in the new policy, etc.

“However, there is a provision to reactivate the existing policy with the same provisions. The maximum grace period to reinstate the policy is 2 years where the insured has to pay within the given duration from the time of the last payment. The insurer will have to pay the entire pending premium amount of the non-payment duration along with some additional charges levied by the insurance company."

The process of reinstatement works differently based on the product type and the insurance cost, etc. In some cases, a few insurance companies might ask the policyholder to submit a fresh health check-up record to re-ensure his/her health details.

Source: Live Mint

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