Struggling with EMIs? Here’s what happens if you Skip your Term Insurance Premium

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Term insurance plans are the most basic and affordable form of insurance products available in the market. They offer protection in the form of financial coverage in case of any event that leads to disability or demise of the policyholder. Technically, term insurance plans are a unilateral agreement between the insurance provider and the buyer which means that the major obligations are dependent on one of the two parties, and in this case, it is the insurance provider. 


Just like an auto insurance policy in order to maintain coverage, one needs to maintain a regular flow of term insurance premiums. In case you miss the term insurance premiums the provider will cancel the policy and you will not be covered anymore. Very often policyholders are worried about their credit rating being affected if they miss their term insurance premium. Furthermore, a lot of policyholders are concerned about what happens if they miss their term insurance premium payment accidentally? What’s the way out? Do I contact my provider? 


To clear all your doubts and queries about term insurance premiums and policies we’ve come up with a new blog where we will demystify all the myths and share important tips and tricks to make sure your policy covers you till the time it is valid. 


Understanding Term Insurance Premiums 

The majority of insurance providers offer flexible premium payment options, here’s a quick rundown-

  • Annually i.e. once in a year

  • Half-yearly i.e. twice a year

  • Quarterly i.e. four times a year

  • Monthly i.e. twelve times a year


How to Make Timely Term Insurance Premium Payment

There are several tips tricks and tools that will help you to timely term Insurance premium payment, here’s a few of them-

  • You can choose an annual payment option and, in that way, you will have to make the payment once a year. 

  • In case you’ve opted for monthly, quarterly, or half-yearly payment options, you can set-up a reminder on your smartphone or computer. The app store is flooded with applications that help you manage your repayments efficiently. 

  • Several banks provide an automated-repayment facility, and all you have to do is set-up an ETF or regular withdrawal to make use of this tool. 

 

What Happens if you miss your Term Insurance Premium?

Typically, in the case of term insurance plans, if you miss the repayment of premium, you will be given a grace period of 30-60 days (depending on the bank) after which your policy will lapse. Term insurance contract details are quite specific and therefore to get the right idea of your available options you can refer to the fine print of the policy. 


Making Use of the Grace Period

With every term insurance comes a provision of grace period which allows the policyholder to make the term insurance premium payment after 30 days from the due date. The insurance provided will not cancel your policy if you make the repayment within the grace period. 

An important point to be kept in consideration is that every company has different rules and guidelines therefore it is better to read the fine print of the policy for better understanding. In case the policyholder passes away within the grace period the insurance company will have to pay the cover which means you are covered in the grace period of your term plan. 


How to Reinstate a Lapsed Term Insurance Plan?

Is there any way out to reinstate a lapsed term insurance policy? Surely, there is one and we’ll tell you how it’s done. The first thing to be understood here is that every company has different rules so there is no general rule that is applicable for all providers. The best way to figure out is by contacting your insurance provider and asking them. 

In several cases, you will have to fill a reinstatement application and pay a penalty decided by the insurance provider and your plan will be active again. However, in some of the cases, the insurance provider might want you to undergo a medical examination to assess your health after the purchase of the policy. In case everything goes right, the insurer will make you fill the reinstatement application along with paying the penalty. 


In a Nutshell

It is not impossible to reinstate a term insurance policy, but it is better to avoid the situation of getting into the entire process. You will end paying extra money in the form of penalty along with precious time. The best approach is to make timely term insurance premium payments to avoid any hassle. However, by any chance, if you get stuck in a situation like this now you know the way out. With these easy steps, you can manage to reinstate your term insurance policy but remember, it is always better to make timely payments.




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