In exchange for an annual premium payment, a term insurance plan gives your family members financial security in case of your sudden death or disability. Much like other types of life insurance, it offers a predetermined sum assured at the time of a claim. Hence, if you are someone that has dependents to provide for, a term insurance plan should be a top priority. Due to being purely based on coverage for a specific event, term insurance plans are extremely affordable. Moreover, they also offer the highest amount of life cover compared to other types of life insurance policies.
Just like other types of insurance, when you buy a term plan, you have to pay a fixed amount as premium every year. And, there is a fixed amount of time that the policy will cover you for. You have to pay premium each year for a term insurance policy. If you fail to do so, you cannot enjoy the security that the life coverage offers.
How Does a Term Insurance Policy Lapse?
A term insurance lapses when the coverage offered expires and becomes invalid. This happens when you fail to pay the annual premium for the policy. When you miss the due date of your premium, you get a grace period of 30 days. This means that if a claim is made within these 30 days, the insurance provider has to disburse the sum assured after processing the claim.
However, if the claim is made after the grace period, it is considered invalid and the policy lapses.
How Can You Revive Your Term Insurance Policy?
There may be an instance where you end up missing the grace period and your policy lapses. You need a life cover but your policy has already lapsed. In such a situation, you can get your policy reinstated.
If you as a policyholder want to get your life coverage back, you have to go through the process of reinstatement. It is the process of renewing a lapsed policy in the middle of the plan to resume effective coverage. In other types of insurance policies, the policy is considered to be terminated after you miss the payment of premium even after the grace period. After which, you have to buy a new policy altogether.
However, in term insurance, reinstating the policy allows you to reactivate the policy even after the grace period has passed. Keep in mind that there is a time limit to reinstate your policy. This means that once you have missed your initial grace period resulting in policy lapse, you have a second grace period to reinstate your policy. This grace period can depend on your insurance provider. In most cases, this period is of 2 years.
The process of reinstatement differs across insurance providers as well. Moreover, the life insurance policy type, insurance cost, etc. also play a huge role in the entire process. One of the biggest factors that can affect reinstatement is your own health. If you have lapsed your policy, reinstatement may require you to submit fresh medical reports.