What’s the deadline to revive my insurance? Here’s what you need to know

As a policyholder, it is essential to pay premiums and renew your insurance policy on time to enjoy the benefits. However, sometimes due to unforeseeable circumstances, policyholders may miss paying their premiums, which can lead to the policy lapsing.

If you are in a similar situation and wondering what the deadline is to revive your insurance policy, here’s what you need to know.

Reviving a lapsed insurance policy

As per the Insurance Regulatory and Development Authority of India (Irdai), if a policyholder fails to pay the renewal premium before the end of the grace period, the policy shall lapse, and the policyholder will not be able to avail any of the benefits under the policy. However, policyholders can revive their policies during the revival period.

The revival period varies from insurer to insurer. Usually, insurance companies provide a revival period of 2-5 years, during which policyholders can reinstate their lapsed policies by paying the due premiums and fulfilling any additional requirements. It is essential to check with your insurance company if your policy is within the revival period.

Impact of lapsing of policy

It is crucial to revive your lapsed policy within the revival period, failing which the policy will terminate, and you will lose out on all the benefits. Your policy may also require medical underwriting on revival, which means that you may be asked to go through a medical checkup before your policy is revived.

Furthermore, the premium for a revived policy can be higher than the initial premium paid while purchasing the policy. Hence, it is advisable to ensure timely payment of premiums to avoid any lapses and termination of the policy.

Medical checkup before purchasing term plan

If you have a family history of hypertension and plan to buy a term plan, you may be wondering if you need a medical checkup. Generally, term plans offer a higher sum assured for a nominal premium amount and involve a higher risk for the insurer. As a result, most of these policies are medically underwritten.

To assess the potential risk, you may be required to undergo medical checkups, subject to the underwriting policy of the life insurer. It is crucial to share all the necessary information with your insurer to avoid any complications during the claim process. The underwriting policy may vary from insurer to insurer, and it is advisable to verify the same before purchasing the policy.

Withdrawal of funds from National Pension Scheme (NPS)

As per the regulations of the National Pension Scheme (NPS), a subscriber can voluntarily exit from the scheme before attaining the age of 60 years, provided he/she has subscribed to NPS for a minimum period of five years. If the accumulated pension wealth is equal to or less than Rs 2.5 lakh, you can withdraw the entire amount. However, if the corpus is higher, you must use at least 80% of the accumulated pension wealth to buy an annuity plan that provides for a monthly pension. The remaining 20% can be withdrawn as a lump sum.

It is important to note that premature withdrawal of the NPS corpus can result in a lower retirement corpus, as you will miss out on the benefits of compounding and long-term growth of investments. Furthermore, if a subscriber withdraws funds from NPS before the age of 60, except in specific circumstances, such as treatment of specified illness or death of the subscriber, they will face a penalty of 1% of the total accumulated pension wealth, subject to a minimum penalty of Rs 1,000. This penalty is in addition to the tax implications that may arise from premature withdrawals.

Conclusion

Timely payment of premiums and renewal of policies is essential for policyholders to avail of the benefits of their insurance policy. In case of lapses, it is crucial to revive the policy within the revival period to avoid termination of the policy. While purchasing a term plan, it is advisable to share all necessary information with the insurer to avoid complications during the claim process.

Similarly, while withdrawing funds from the NPS, it is essential to understand the terms and conditions, as premature withdrawals can lead to lower retirement corpus and penalties. As a policyholder, it is advisable to stay aware of the policy and regulatory requirements to make informed choices and secure your future.