Do you have a life insurance policy? Delayed any insurance premium payment? Want to know about the ‘grace period’ for life insurance premium payment? This blogpost has got you covered. Read on.
To begin with, you have taken the right step by choosing life insurance. Be it a traditional life insurance scheme (a.k.a ‘LIC Policy’) or a modern, new-age term insurance policy, life insurance policies have to be part of every working individual’s schema of personal finance. You should ideally keep a schedule for all your insurance payments handy and set reminders about such payments. However, in some extraordinary situations or when things are not in your control, chances are that you may miss or delay a life insurance premium payment. This is more relevant in the times of COVID-19 pandemic with many unforeseen job cuts/expenditure among the working group.
Life Insurance Policy Grace Period
If you miss a payment of your life insurance premium, a good thing to know is that almost all of the life insurance companies provide a ‘grace period’. A grace period usually gives you anywhere between 15-30 additional days after your due date. During the grace period, you can pay your life insurance premium without any fine or penalty and the policy will still be in force. Based on the type of life insurance payment (monthly or annual lump sum payment), the grace period varies. Traditional life insurance plans & term life insurance plans with monthly payment modes will usually get 15 days of the grace period. Traditional and term insurance policies with quarterly/half-yearly/yearly payment modes will give you one month/not less than 30 days. Ideally, you should make use of the insurance policy grace period to stop your policy from becoming lapsed.
What happens if you miss the Grace Period too?
During the grace period, your policy will still be in force and attract no penalties. However, if you miss a payment for the life insurance grace policy’s period as well, then your policy will lapse. A lapsed life insurance policy can still be reinstated as most insurance companies provide that option. However, you may have to pay hefty fines or penalties or even may have to undergo medical tests again to revive your policy. In any case, if you miss the grace period, you should compare the costs of reviving the lapsed life insurance policy against taking a new policy altogether. You should also consider the fact that the premium you pay for a new policy will be higher as your age has increased.