• A term policy necessitates that the policyholder make premium payments according to a selected schedule of annual, half-yearly, quarterly, or monthly payments. The premium is due on a specific date by which the payment must be made. Based on the payment made, the policy is renewed for the subsequent term. Here are some critical points that should be noted.

What occurs if the premium is not paid by the due date?

• The premium payments in a term policy must be fulfilled on due dates as outlined in the schedule for the renewal to be successful. However, if the policyholder does not meet the expiry date, an extension can be granted. Past this period, the policy may lapse.

What does a grace period mean in a term policy?

• A grace period in a term policy is the additional time allowed to pay the premium if the due date is missed. For an annual, half-yearly, or quarterly premium payment schedule, the grace period extends for 30 days from the original due date. For a monthly payment schedule, it is 15 days.

What occurs if you default even during the grace period?

• A grace period provides extra time to pay the premium after the due date. If the policyholder cannot make the payment within this timeframe, they will face the repercussions. In some instances, the premium may still be paid along with late fees or penalties. In the worst-case scenario, the policy may be cancelled.

What happens if you neglect to renew the term policy on time?

• A term policy gives you a straightforward life cover where the death benefit is provided in exchange for premium payments. Thus, if you do not renew on time, the policy is cancelled, and the life cover is rendered inactive. There will be no death benefit available, and any premiums that have already been paid will not be refunded. This is indeed a significant loss, particularly if the policy is a Rs 1 crore term plan, as you would forfeit its benefits.

What does revival of a lapsed term policy signify?

• The revival of a lapsed policy refers to restoring the term policy to regain its benefits. It is the procedure through which the policy resumes operation even after a missed payment and cancellation. However, this is subject to the discretion of the respective insurance company based on its terms and conditions.

How can a lapsed policy be revived?

• Certain insurers permit the renewal of a lapsed policy. To accomplish this, several documents, such as health certificates and KYC proofs, must be submitted. Additionally, specific fees are required to revive a lapsed policy. This includes late penalties, interest accumulated during the default period, and the payment of any outstanding unpaid premiums. You may also encounter a new set of terms and conditions imposed by the insurer.

What is the revival period in life insurance?

• A revival period in life insurance signifies the timeframe permitted by the insurance provider to reinstate a policy that has lapsed. Generally, this timeframe lies between 3-5 years and differs among various insurers. The commencement of this period starts from the due date of the initial unpaid premium.

How to prevent missing policy renewals?

• You can prevent missing premium due dates or resulting policy lapses by ensuring payment through the following methods:

• Establish a calendar for your premium payments and enable an alert.
• Set a standing order with your bank to automatically deduct premiums via ECS.
• Opt for auto-pay options using your ATM card or UPI.
• Select a policy that is conveniently affordable for you.

Evaluating Your Insurance Portfolio

• Insurance is designed to safeguard you when unforeseen events occur. What if the safety net you have is insufficient or has a gap concerning your needs? Picture this: you have purchased a ₹1 crore life insurance policy, believing you are completely protected. However, by the time it is actually needed, this amount may not adequately support your family, particularly when you consider the escalating living expenses, debts, and future obligations.

5 Clear Signs You are Underinsured

• Here are five unmistakable indicators that your insurance coverage may be inadequate, putting both you and your family in jeopardy.

1. Would your family encounter financial difficulties without you?

• Life insurance serves as a safety net for your family in the event of an unfortunate occurrence. If your sum assured is less than what your family may need to meet expenses, you may be underinsured.

2. Medical expenses continue to increase

• Healthcare costs are escalating rapidly. Even if your health insurance appeared adequate a few years back, it may no longer cover rising hospital, surgery, or long-term care expenses.

3. Insurance does not reflect your current financial situation or responsibilities

• Life situations evolve. Your coverage should align with changes such as marriage, children, career progression, or retirement. Regular reviews ensure your policy meets your present needs.

4. Premium was the critical factor when purchasing

• Opting for a policy based solely on a lower premium might lead to inadequate coverage. A policy should balance affordability with sufficient protection.

How to Shield Yourself from Being Underinsured

• Review your policy regularly to confirm it corresponds with life changes.
• Don’t compromise on coverage just to save on premiums.
• Consult an expert to assess your insurance needs effectively.

Understanding ULIP Surrender Value

• Unit-Linked Insurance Plans (ULIPs) combine life insurance with investment opportunities. However, financial changes may require you to surrender your ULIP. Here’s how you can check the surrender value:

How to Check the Surrender Value of Your ULIP Fund

1. Check Your ULIP Policy Documents

• Your policy documents contain details about the methodology for calculating the surrender value, including any applicable charges.

2. Contact Your Insurance Provider

• Reach out to your insurance company via customer service or your insurance agent to obtain current surrender value information.

3. Use Online ULIP Calculators

• Many insurers offer online ULIP calculators to estimate surrender value. However, always confirm these results with your provider.

4. Consult a Financial Advisor

• A financial advisor can guide you in assessing the implications of surrendering your ULIP and suggest alternative investment options.

Identifying the Best ULIP Plans for Your Needs

• Consider the following when selecting a ULIP:

• Investment Goals: Define your future financial objectives.
• Assess Your Risk Appetite: Choose a ULIP fund that aligns with your risk tolerance.
• Compare Plans: Analyze different ULIP options.
• Evaluate the Life Coverage: Ensure the sum assured meets your family’s financial needs.

Conclusion

Consistently assessing your insurance portfolio is one of the most effective ways to safeguard your future. By keeping it current, you ensure that your coverage matches your evolving life, securing your loved ones and peace of mind. Regularly reviewing your insurance ensures that you are always prepared for unforeseen circumstances.