In times of uncertainties, you would want your loved ones to be well-protected from life risks and unfortunate circumstances. You would not want them to go through financial burdens, especially in your absence. There is an option that can help you provide the protection your loved ones deserve. All you have to do is simply invest in a good term insurance plan. You can even get your own 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 that 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 which compensates the family members of the policyholder in the event of their sudden demise. There are different types of term plans that you can choose from based on your requirement and your budget. The sum assured that your loved ones get from the policy helps them in maintaining financial stability and managing vital expenses. You can purchase online term plan as well as per your convenience.
How does a term plan lapse?
Your term insurance policy will be operational as long as you keep paying the premium on time. However, defaulting on the payment could cause you to pay extra premium as you could be fined as well. The term insurance age limit usually begins at 18 and can go up to 75 years. The sooner you buy the policy, the cheaper will be the premium. However, if you buy the policy at a later stage, you will be required to pay a higher premium. This means that you if you default on your premium payment, you will be required to shell out more for late payment.
Defaulting on premium could be due to loss of employment, medical emergency, or other miscellaneous expenses. 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.
How to revive your term plan?
In order to successfully revive your term plan, you need to have paid your premium for 3 years continuously. Keeping your plan alive for 3 years ensures that you get a grace period of 2 years after you have stopped paying the premium. It is recommended to revive your policy within 6 months of the grace period. This ensures that you are not required to pay any penalties in addition to your premium.
However, if you were to pay it after 6 months, your insurer will charge you with penalties. Your insurer could also levy interest on your premium payment which could substantially increase the burden on your pocket. Also, your insurer might want to redo the medical tests they did before issuing your policy. This is due to the fact that you could develop some new ailment, or your body could be more susceptible to diseases than it was before.
Things to keep in mind before revival
Here is an overview of things you need to keep in mind before reviving your term insurance:
- Revive your policy at the earliest 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, which is usually of 30 days, the insurer might compensate the family of the policyholder.
This way you can revive your term insurance plan to take full advantage of the benefits provided by it. With the assistance of a term plan calculator, you can select the plan that suits your requirement.