“Don’t let your policy lapse,” we hear that phrase from friends and relatives when we talk about our insurance policy.
But what does a lapse of term policy mean?
Simply put, if your term insurance plan has lapsed, it implies that you can no longer avail the benefits and coverage provided under the policy. Once your policy lapses, you cannot use any feature of the policy and you lose the right to make a claim against it.
Nobody wants to lose the insurance coverage benefit after investing in a term plan. It is detrimental to your family’s financial well-being.
To avoid having your policy getting lapsed, here are few things you can do:
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Make Your Premium Payments on Time.
The best way to ensure that your term insurance cover never lapses is by making payments on or before the due date. In case, you are unable to make payments on the due date; insurers provide you a grace period.During this period, you still have the option to pay your pending premiums. However it is better to be early than sorry.
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Set Up Automatic Billing (ECS) for Your Term Insurance Policy.
We all have busy schedules and hectic days. It is not always possible to remember the premium payment due date. But technology helps. One easy and do-able way to ensure that you don’t forget to pay on time is by adopting the ECS mode for premium payment.
Through this option, your premium will be auto-debited on the exact due date from your bank account or credit card (whichever you choose).
This process is fairly simple, can be done online through setting up standing instruction on your credit card or by submitting an auto pay form with your bank details at the nearest branch. You can also opt for e-NACH, a process to set up payments from your bank account online if your account is linked with your Aadhaar.
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Keep Your Communication Details Updated.
During the purchase of your insurance policy, you are required to provide your communication details to the insurer. This includes your permanent address, current address, mailing address, email id, phone number, etc.
Using these details, your insurance provider will send you emails, text messages, premium reminder letters etc. These helpful and informative notifications will keep you abreast of your policy and it’s requirements like premium payment dates.
In case of any change in these communication details, it is recommended that you update the same with your insurance company. This will ensure that you get timely reminders and pay the premium on time or beforehand. You can also update online by signing into the customer portal.
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Be Aware of Your Payment Capabilities.
Before you purchase your term insurance policy, make sure you are aware of your payment capability. For instance, opting for a lump sum premium payment might seems like a good idea while opting for it because it avoids the hassle of multiple payments in a year, but it can burn a hole in your pocket, which is never a good idea. Going for options like monthly or quarterly payments can be a smart move for your financial planning. Smaller payments ensure that you face no financial strain while making your premium payments.
Few Additional Tips:
We also advise you to open all the emails received from your insurer as soon as you get them. It might seem unimportant, but you never know. The mail could be a notice of your missed premium payment or be related to your policy.
If you enter the grace period, reinstate your policy as early as possible.
Reinstating your term insurance policy might be less expensive than letting the policy lapse. If you don’t reinstate in time, you might have to go through the process of underwriting process and medical examination again.
Conclusion:
Missing your premium payments can lead to a lapse in your policy. After lapse, the coverage on your policy may no longer be active or may be squeezed (as per the terms and conditions of the policy).
However, regular and disciplined premium payments will ensure financial protection to your loved ones during an unfortunate event. So, pay your premiums regularly and stay protected!
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