The Buyt Desk
A Term Insurance policy provides financial security for dependents of the insured. So always pay the premiums on time and do not let the policy lapse.
Life insurance products help you achieve your financial plans by providing financial security. Term insurance policy is the simple one of the many available products. A term insurance plan is purchased to provide financial security to the dependents of the insured in case of the death of the insured. This is the simplest and easiest way for providing your dependents financial security in your absence. It is a must to buy this policy if you are the sole bread earner of the family. And if you have loans in your name and other liabilities, then you have to cautiously take care that your dependents will not be affected because of these liabilities post your demise.
Term Insurance Policy Premium
You can choose the premiums to be monthly, quarterly, half-yearly or yearly. Opt for the one which is very affordable for you and you don’t miss the payment of premium. On-time payment matters as delay may lapse the policy. When the policy lapses, the insured will no longer be covered under the policy. The policy ceases and the whole purpose of buying the insurance is defeated. When you do not renew your lapsed policy or repeatedly fail to pay your premium, the policy will be terminated and all the premiums paid are wasted without any benefits. For the policy to be active and provide coverage to the insured, you need to pay all premiums on time or at least within the grace period. The grace period is usually 15-30 days and the policy benefits are valid during the grace period.
Why should you not lapse the policy?
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Lapsed insurance will not cover you
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When you buy a new policy because of a lapsed old policy, the premiums of the new policy will increase because of your age. So better not to lapse the policy.
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As your age, medical conditions also change and if any medical issue has risen, the new policy premiums are going to cost more. So do not lapse the policy if you have a health condition.
How to keep track of the premium due date so that policy does not lapse?
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Set up the automatic payment – Even when you have funds you may forget to pay the premium. The insurance company will send an automated reminder message but it is still better to keep another reminder. If you are sure that your bank account will have funds, then set an auto debit for premiums before the due date. Give standing instructions to your bank to auto-debit the premium amount to the insurance company on the due date of the policy premium. You can do this anytime during the policy period. Few banks give this option to their customers on their digital/online apps. You can opt for automatic payment through a credit card.
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Keep your contact details updated – Always remember to update your contact details especially when you change your phone number, address or e-mail ID. The insurance company will contact you only through these details. You may be unreachable if you do not update the details. You will receive the premium reminders on the registered phone number, address and email ID in form of SMS, letter and email respectively. With these reminders, you may not miss the due date.
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Adjust the premium payment frequency – You can change the premium payment frequency. If you feel paying a large sum annually is a little difficult then you can opt for monthly premiums so that your burden is divided and will not feel pressured at the end of the year. Paying a small amount every month could be easier than paying a lump sum annually.
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Prioritize your expenses – When you find it difficult to pay premiums because of a lack of funds, you need to relook into your expenses. Prioritize the things that you should spend on first. And your insurance policy should be the top priority as it covers you and your family.
How to revive lapsed policy?
When you cannot arrange money to pay the premiums or skip paying as you do not remember, your policy will lapse. You will still have an opportunity to revive your lapsed policy. From the last missed premium due date, you will have 2 years to reinitiate it. You need to pay the outstanding amount (sum total of unpaid premiums) along with the delayed interest. If there is a huge gap, then you may have to undergo medical tests to certify your good health and the risk will be reassessed. Only the insurance company has a say in reviving the lapsed policy.
Summing up
A term life insurance plan is a must for every earning individual to financially protect the dependents in case of the untimely death of the insured. Insurance is a risk mitigation tool but you need to pay the premiums on time. Financial discipline can save you from lapsing your insurance policy. To enjoy the benefits of the policy and for cover to be available you need to make sure to not miss the premium and avoid the policy from getting lapsed.
