Missed a Renewal Premium?

Every insurance cover is given for a particular period of time, usually a year. And the period of cover would be printed on the policy document given to the policy holder. Renewing the policy means paying the required premium for the next year. And this payment has to be done on or before the expiry date mentioned in the policy document.

However, most of us would have numerous policies and keeping track of the due dates of all these policies is not always possible. It is true that the insurers send you renewal notices and intimations, which legally speaking; they aren’t obligated to do so. We can depend on our insurance agent or broker to remind us at the time of renewal. But, as the impact of the nonrenewal of policy adversely affects the insured’s lives, it makes lot of sense to get involved and ensure that the policies are renewed at the correct time, because delay in paying the premium even by one day can lead to your policy getting lapsed. When a policy gets lapsed, the cover can entirely cease, can become restrictive in nature or many benefits that were accrued may get lapsed. Non-renewal of some policies may not affect us, but there are certain policies like Motor, Health and Life that will affect our daily lives adversely.

Motor Insurance which consists of Own Damage Component and Third party insurance is of utmost importance to every individual. These one year policies have to be renewed on or before the due date to make sure that the policy continues in force.  If the motor policy lapses due to nonpayment of premium then the cover ceases instantly.  To reinstate your insurance cover, you will have to take your motor vehicle for a physical inspection to your insurer who will take photographs of the vehicle from all sides to prove that the vehicle was in good condition at the time of renewing the policy. In case you are opting for third party cover only, then payment of premium to your insurer will ensure a new policy.

Health Insurance also just like motor insurance is annual in nature and nonpayment of premium will lead to stoppage of medical cover. Health insurance policies accrue benefits over a period of time. The benefits might be bonus, annual increase in the sum insured and most importantly completion of waiting periods that are applicable for certain diseases. Most health policies come with waiting period for diseases and lapsing of the policy will lead to going through these waiting periods all over again. Once a health policy has lapsed, the only option is to take a fresh policy where all waiting periods would be applicable and all prior bonuses would be lost.

Life Insurance policies are usually long term policies that require periodic premium payments. In case the policy holder misses a premium payment, the policy may cease completely.  Though ULIPs never technically lapse, the benefits of the policy may get reduced. In either case the reason for which we have taken the policy would not be met. The only silver lining in the case of life policies is that most companies offer a grace period of 15 to 30 days after the premium due date. This offers a breather to policy holders. Life policies can be revived in case of a lapse usually by paying a fine along with the premium and in certain cases medical tests are also required. Reinstatement rules vary from life insurance company to company.