Just two months back, Rakesh Gulati’s loved ones was pleading with a life insurer not to reject their claim and rather spend the sum assured so that the loved ones could meet every day costs. Rakesh – 38-year-old application engineer – died in a road accident whilst returning to his household in Delhi from his workplace in Gurugram. Rakesh died just after paying premiums for various years for his term life insurance coverage program that he purchased in 2015. Unfortunately, as issues turned out, the insurer informed the loved ones members that the last premium of Rakesh’s term life insurance coverage policy was unpaid, therefore his policy lapsed and the claim was denied.
It was devastating for the loved ones to study that Rakesh’s life insurance coverage policy had lapsed as the lost advantage ran into just about a crore. Rakesh’s loved ones is just one amongst numerous other households who have to go by means of endless monetary hardships due to lapsed life, well being or motor insurance coverage policies. Under most insurance coverage policies, the worst influence of lapsation is on the policyholder and his/her monetary dependents as apart from a loss of cover there is also a important loss of various essential rewards linked to the insurance coverage policy.
All insurance coverage policies – be it life, well being or motor – come with an expiration date and if the policyholder forgets to renew the policy prior to the expiration date, the policy lapses. A lapsed insurance coverage policy is equivalent to getting no policy at all, as the cover offered by the policy is no more valid. Once your policy lapses, your insurer will not be in a position to provide monetary help. It is, for that reason, advised to normally renew your insurance coverage policy on time prior to it lapses, as it will assist you stay away from any monetary implications.
However, if any of your insurance coverage policies has lapsed due to unavoidable situations, there are strategies how you can critique or renew your lapsed insurance coverage policy and once more guarantee a monetary blanket about you and your loved ones.
Term Life Insurance Policy
When you acquire a term life insurance coverage program, the insurer offers you the alternative of paying the premium in month-to-month, quarterly or half-yearly instalments, or yearly as a lump sum. You may well opt for any of the possibilities as per your spending capacity. Once you quit paying the premium of your term life insurance coverage program, the policy becomes inactive, nonetheless, it does not gets lapsed. The insurer makes it possible for you a grace period of 15 days – in case you spend the premium in month-to-month instalments – and a grace period of 30 days – in case you spend the premium quarterly, half-yearly or yearly – to re-activate your term program. However, if you nevertheless do not make the payment for renewal of your term insurance coverage, the policy lapses.
As per the insurance coverage regulator’s suggestions, the maximum revival period for term insurance coverage policies issued prior to December 2019 is 2 years whilst for policies issued just after December 2019, the revival period is 5 years, post which the policy gets terminated. In order to revive a lapsed term life insurance coverage policy, the policyholder requirements to spend all the outstanding premiums – from the date of 1st unpaid premium up to the revival date – along with interest on outstanding premiums and taxes and levies as applicable. In specific instances, the insurance coverage firm may well even ask for a health-related examination once more in case of policy revival.
Health Insurance Policy
Lapsation has the most important side effects on well being insurance coverage as discontinuity of the policy leads to reset of waiting period for typical and pre-current ailments, and total loss of accumulated no-claim bonus. It is normally advised to acquire early so that the waiting period is served at the appropriate time. If you are unable to renew your well being insurance coverage policy at the policy renewal date, the insurer offers you a grace period of 30 days to renew the policy. If you spend the premium inside these 30 days, your policy is revived. However, if you fail to renew the policy even for the duration of the grace period, the policy is lapsed and can’t be ever revived. The only remedy you will be left with is to acquire a fresh well being insurance coverage cover below which you will require to serve a fresh waiting period.
Motor Insurance Policy
If you do not want to shed out on the no-claim bonus, it is advised to revive your lapsed motor policy inside 90 days or you will shed the complete no-claim bonus that can go as higher as 65 per cent of the personal harm premium and is usually worth various thousand in case of a mid-sized automobile. To renew the lapsed policy, you can get in touch with the insurer straight or by means of intermediaries. Moreover, contemplating the ongoing COVID-19 pandemic, you may well also take benefit of the self-inspection video function for physical verification of your car. Under this function, all you require to do is upload a video and some images of the car on the insurer’s app and get the policy renewed inside a couple of hours devoid of the require of contacting an agent.
(By Amit Chhabra, Head-Health Insurance, Policybazaar.com)