Life insurance policies are always an ideal option to secure your family financially. But, there are different factors associated with these policies, like coverage, premiums, etc. that you must know. One such factor is the lapse of a policy. You need to make regular payments to keep your life insurance policy active. Failure to pay premiums on time can result in a policy lapse.
Life Cover Starting @ just ₹18/day*
Choose India’s Only Personalised Term Plan
Modify coverage as per your life stages & commitments
Hassle-Free Claim Settlement
99.38% Claim settlement ratio*
Smart Income Tax Savings
Save up to ₹54,600* on your taxes
There can be several factors that can lead to your policy lapse. You must be aware of these to avoid them on time. These include the following:
The most common factor that causes a policy to lapse is the failure to pay premiums on time. Policyholders are supposed to make their premium payments within a stipulated period; failing to do so can cause a policy to lapse or be terminated by the insurance company.
Most insurance companies have an automatic premium deduction option, automatically deducting your premiums from your bank account based on your chosen frequency. If there are insufficient funds in your account or you have made changes in your bank account without informing the insurance provider, it can result in the lapse of your policy.
Your existing insurance policy can also lapse when you intentionally want it terminated. If you wish to switch to another policy or discontinue it, you can surrender it by asking your insurance provider to terminate it. However, surrendering a policy voluntarily can eventually result in getting lapsed.
Insurance companies need your permanent address and other details so they can contact you whenever necessary. Suppose you have provided incorrect contact information or changed such details. In that case, you may miss payment notifications, which can result in the non-payment of premiums and ultimately cause your policy to lapse.
Insurance companies understand that you may be unable to pay timely premiums every time. Thus, they do not instantly terminate your insurance policy but extend the period to a few more days to let you arrange and make the payment. This period is called the grace period.
The number of days in the grace period usually ranges from 15 to 30 days, even though it varies from company to company. Thus, even if you fail to pay the premium on time, you can pay it during the grace period without additional charges. Your policy can lapse if you fail to pay your premiums during the grace period.
Whenever an insurance policy lapses, you can face the following implications:
Policy lapse means terminating all the facilities you would get from your policy. This includes the financial protection offered during the policy term, as well as any additional benefits, riders, and coverage features.
If you have not applied for ROP or Return of Premium benefit for your insurance plan, you will not get any refund of your paid premiums once it has lapsed. Thus, a lapsed policy can also lead to a huge financial loss.
Getting your existing policy lapsed is a serious concern since it takes away the assurance of financially securing your family. Nevertheless, most insurance providers offer a revival feature to help reinstate your lapsed insurance policy by following a few rules. However, reinstating your policy will cost you more than before, and it can only be possible within a specific period.
This higher cost is charged to deal with the risks of policy lapsing again. Also, the insurers might ask for medical tests in case the policy has lapsed due to any health issues.
The simple answer to this is yes. Reviving a lapsed policy is possible, however based on specific circumstances. For this, you must provide necessary proof related to your identity and your relationship with the deceased insured.
You may also need to submit required documents such as a death certificate or other forms of legal documentation as asked by the authority. After conducting a thorough verification of the circumstances and proofs provided by you, the necessary authority can consider reviving your lapsed policy.
Reviving a lapsed life insurance policy is a crucial financial step, which requires careful consideration of a few points to execute it. This includes the following:
You can contact your insurance provider immediately via email or their contact number. They can provide specific instructions to guide you through the entire process of reviving your lapsed policy.
Once you connect with your insurance company, they can provide you insights into how many payments are due on your side. You need to make the payments along with any applicable interests or penalties to revive your lapsed policy.
Based on the circumstances, terms of the policy and duration of its lapse, you might need to provide the necessary documents as asked by the authority. This can also include a medical certificate or a health declaration form.
If your policy has been lapsed for an extended period, the insurance company might need to perform a few medical tests to assess the policyholder's current health status. Once your lapsed policy has been revived or at least the rival application has been considered, maintain regular premium payments to avoid such events in the future.
Even though non-payment of premiums is the main reason for lapsed policies, there can be other reasons as well. Your insurance policy can also lapse whenever you do not renew your existing policy once it expires. In case you do not convert your existing insurance policies into another type after they expire, your policy lapses here too. The most crucial consequence of a policy lapse is that your dependents would not receive the death benefit if you pass away untimely. With this, the main motive behind investing in a life insurance policy gets dismissed. Thus, take necessary measures to keep your insurance policy active for a long time.
Given below are some of the commonly asked questions about what is a lapsed coverage policy.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
1.7K Linkedin Followers 
Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
Products 
Company
Legal
Support
Car Insurance 
Bike Insurance
Health Insurance
Group Health Insurance
Travel Insurance
Life Insurance
