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Life insurance is a vital safety net for your loved ones, and you must maintain it for as long as you have dependents. Of course, it is recommended that you pay your premiums on time to ensure this. However, one may miss out on their premium payments due to financial constraints hindering the ability to pay the same. Have you missed out on paying your life insurance premiums? What should you do in such a scenario? Here is a guide that will help in these situations.
Before you finalize the purchase of your life insurance policy, you should always look at the premium payable for a certain amount of coverage to ensure that it is within your budget. This can also be done when comparing various plans using a life insurance premium calculator. Once you are done, you will have an idea of what you have to pay and also you can choose your payment frequency, i.e. monthly, quarterly, annual or half-yearly payments. However, if by any chance, you miss the due date for the payment, you should be aware of the following:
Now, all is not lost if you miss paying the premiums even in the grace period. Here`s why:
Some policies allow reinstatement through applications after policies lapse, depending on specific terms and conditions outlined by the insurer. You may have to go through medical check-ups and provide all relevant documents as required by the insurance company. You should always reach out to the insurance company if your policy lapses and you have missed the grace period itself.
In most cases, you can reinstate your policy within 3-5 years, known as policy revival. To revive your lapsed policy, however, you will have to pay all the premiums due and the penalties imposed by the insurance company. For instance, suppose your annual premium is Rs. 30,000 for your insurance policy, and you do not pay it for two years. This means a due premium of Rs. 60,000 for reviving your policy. At the same time, the insurance company may charge a penalty of 10% of the amount due in this case. This works out to another Rs. 6,000. Hence, the total amount payable is Rs.66,000 if you wish to revive your policy.
You should always plan for the premium payment when you buy any life insurance policy. Make sure you have at least six months` worth of premiums in your account. If you cannot stretch till this point, keep it to three months at a minimum. This will help ensure that the scenarios where you cannot pay your premiums due to fund delays or other unforeseen expenditures are avoided. Remember that your policy coverage is a financial safeguard for your family in your absence.
Timely payment of premiums will help you keep the policy active and maintain all the inherent policy benefits. Auto-debit plans are usually the best options. If you get a sizable bonus, you can also invest the same in yearly premiums if that is more convenient for you. Make sure that your premium payment does not compromise other investments and necessities. Smarter financial planning is needed in this case.
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