Term Insurance Grace Period

A lapse of insurance coverage means if a policyholder fails to pay their premium within the Term Insurance grace period, the policy will cease to exist, and the benefits provided by the policy will no longer be available to the policyholder or their beneficiaries.
This includes the coverage amount, which means that if the policyholder passes away, their beneficiaries will not receive any death benefit. Moreover, any riders, such as Accidental Death Benefit, Waiver of Premium Rider, or Critical Illness Benefit, would also be terminated along with the policy.
In addition, the policyholder would not be able to avail of any other benefits provided by the policy, such as tax benefits or loans against the policy. 
 

Insurance policies are designed to provide coverage for various risks, including pre-existing diseases. Certain insurance policies include a waiting period before the coverage for pre-existing diseases becomes active. During this period, the policyholder is not entitled to claim coverage for any pre-existing illnesses. However, once the waiting period is over, the policyholder can claim coverage for their pre-existing conditions, subject to the terms and conditions of the policy.

If a policy lapses due to non-payment of premiums within the grace period, the coverage for pre-existing diseases may become void. This means the policyholder would have to serve the waiting period outlined in the policy agreement again before being eligible for coverage for any pre-existing conditions. Depending on the insurer and the policy, this waiting period can range from a few months to a year.
In some cases, insurers may also exclude coverage for pre-existing diseases altogether if the policy has lapsed and the waiting period has already been served. This means that the policyholder may not be eligible for any coverage related to pre-existing conditions, even if they have previously served the waiting period.
 

A No-claim Bonus (NCB) is a benefit offered by the insurer to the insurer for not raising claims during the insurance policy term. The NCB increases every year, and it can accumulate up to a certain limit, which varies depending on the insurer.

If a policy lapses due to non-payment of premiums within the insurance grace period, the policyholder loses the benefits of the policy, including the accumulated NCB. When the policy is renewed, the policyholder would have to start from scratch without the NCB they had accumulated over the years. This can lead to an increase in the renewal premium, as the NCB is a factor that affects the premium amount.

For instance, if Ms Pooja has a five-year term insurance policy with an NCB of 10% each year, and does not make any claims during the policy term, the accumulated NCB would be 50% of the premium amount. However, if the policy lapses, and Ms. Pooja fails to renew it within the specified period, the NCB would be lost, and she would have to pay a higher premium amount to renew the policy.
 

Portability is a process that enables policyholders to transfer from one insurer to another without losing the benefits of their current policy. It is a useful feature that allows policyholders to avail better coverage, higher sum assured, and other benefits offered by other insurers.

However, if the policy lapses due to non-payment of premiums, the policyholder loses the option to port the policy to another insurer. This means that the policyholder cannot avail of the benefits of their existing policy with another insurer. Instead, they would have to apply for a new policy with a different insurer, and their coverage would be subject to the terms and conditions of the new policy.

The loss of portability can be a significant disadvantage for policyholders as it restricts their ability to switch to another insurer to avail better coverage or other benefits. Moreover, policyholders who have pre-existing conditions may find it difficult to obtain coverage from a new insurer, as the new insurer may subject them to a waiting period or other restrictions.
 

If the policyholder wishes to reinstate the lapsed policy, they would need to renew the policy by paying the outstanding premiums along with interest and possibly providing a health certificate.

Renewing a lapsed policy can be more expensive than continuing with an existing policy without any lapses. Insurance companies charge interest on outstanding premiums to compensate for the time value of money and the cost of recovering the premium. The interest rate can vary depending on the insurer and the policy terms, but it is usually higher than the prevailing market rate.

In addition to the outstanding premium and interest, some insurers may require the policyholder to provide a medical certificate. This certificate ensures that the policyholder is still insurable and does not have any medical conditions that would make them a high-risk candidate for insurance. The cost of obtaining a health certificate can vary depending on the insurer and the type of life insurance policy.

The waiting period is a specific duration of time during which the policyholder cannot make a claim for a particular illness or condition. On the other hand, the grace period is a specific duration of time during which the policyholder can pay the premium without any penalty or interest.
 

If the grace period has ended, some insurance companies offer a revival period, during which the policyholder can revive the policy by paying the outstanding premium along with interest.
 

Yes, policyholders are allowed to make an advance payment of their term insurance premium for a specific duration of time, usually up to one year. Some insurance companies even offer discounts for advance premium payments.
 

Yes, the policyholder can claim the benefits if they pay the premium during the grace period. However, paying the premium within the due date is advisable to avoid any inconvenience.
 

If the policyholder passes away during the grace period, the death benefit will be paid to the beneficiaries as per the policy terms and conditions. However, the outstanding premium will be deducted from the death benefit before it is paid out.
 

Generally, insurance companies do not have a limit on the number of times a policy can be revived after it lapses. However, the revival process may become more difficult and expensive after multiple lapses, and the insurance company may require additional documentation or medical check-ups before approving the revival. It's always advisable to pay premiums on time to avoid the lapsing of the policy.