In times of uncertainty, you would want your loved ones to be well-protected from life risks and unfortunate circumstances. You would not want them to suffer financial burdens, especially in your absence. An option can help you provide the protection your loved ones deserve. All you have to do is invest in a good term insurance plan. You can even get your online term plan from your preferred insurer.
However, even your term plan can lapse if you fail to pay the premium on time. This could rob you and your loved ones of all the benefits the plan offers. Is it possible to revive a lapsed-term insurance policy? If so, how can it be done? Read more to find out.
What is term insurance?
Term insurance is a type of life insurance policy that compensates the policyholder’s family members in the event of their sudden demise. You can choose from that your loved ones get to maintain financial stability and manage necessary expenses. You can choose from different term plans based on your requirement and budget. You can purchase an online term plan as well at your convenience.
How does a term plan lapse?
Your term insurance policy will be operational if you keep paying the premium on time. However, defaulting on the payment could cause you to pay a bonus, as you could also be fined. The term insurance age limit usually begins at 18 and can go up to 75 years. The sooner you buy the policy, the cheaper the premium will be. However, if you accept the policy later, you will be required to pay a higher premium. If you default on your premium payment, you must shell out more for late payment.
If you default on your payment, your insurer will provide you with a grace period. This period varies from one insurer to another. If you manage to pay the premium during the grace period, the policy will be revived. However, failure to repay during the grace period will lapse your policy. Defaulting on premium could be due to loss of employment, medical emergency, or other miscellaneous expenses.
How to revive your term plan?
To successfully revive your term plan, you must continuously pay your premium for three years. Keeping your plan alive for three years ensures a grace period of 2 years after you have stopped paying the premium. It is recommended to revive your policy within six months of the grace period. This ensures that you are not required to pay any penalties in addition to your premium.
Your insurer could also levy interest on your premium payment which could substantially increase the burden on your pocket. However, if you were to pay it after six months, your insurer would charge you with penalties. Also, your insurer might want to redo the medical tests they did before issuing your policy. This is because you could develop some new ailment, or your body could be more susceptible to diseases than before.
Things to keep in mind before the revival
Here is an overview of things you need to keep in mind before reviving your term insurance:
- Revive your policy early during the grace period to avoid paying extra on the existing premium.
- Failing to renew your policy during the grace period will make your policy null and void.
- If you try to review your policy post-grace period, the insurer will not revive it and will deem your policy to be null and void.
- If a claim is filed during the initial grace period, usually 30 days, the insurer might compensate the policyholder’s family.
This way, you can revive your term insurance plan to take full advantage of its benefits. With the assistance of a term plan calculator, you can select the plan that suits your requirement.