What is the process of reactivating lapsed life insurance policy?

Not paying life insurance policy premiums on time can lead to the policy being lapsed. This would lead to the termination of benefits and coverage of the policy. Follow the process below to reinstate your lapsed insurance policy.

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A reinstated policy is as good as a new one, and hence the insurance company may impose new terms and conditions.
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It is a good practice to set reminders for premium payments of insurance policies. If the due premium is not paid beyond the grace period, the policy tends to lapse which leads to termination of all the benefits and coverages provided under it. However, one can reinstate a lapsed policy by following a process.

Check revival period
Most companies provide a period of two to three years from the end of the grace period for the reinstatement. The policy document provides this information along with the process to be followed. One must make sure that the reinstatement is being made during the revival period.


Application
To reinstate a lapsed policy, the policyholder needs to make an application for revival to the insurance company. The company may prescribe submitting a standard revival form. It is recommended to take advice from the insurance agent or visit the company branch to understand the process.

Due payment and penalty
To be able to revive a policy, one needs to pay due premiums for all the years since the lapse of policy along with any penalty that the insurance company may levy for non-payment of premiums.

Medical checkup
In certain cases, a medical checkup at the designated medical centre is mandatory. In other cases, a declaration of good health may be required for the revival.

New terms and conditions
A reinstated policy is as good as a new one, and hence the insurance company may impose new terms and conditions. The policyholder needs to make note of the same by going through the new policy documents.

Points to note
  • Reinstatement of a policy tends to be a cost-effective option as compared to getting a new one.
  • Insurance companies also come up with policy revival campaigns encouraging people to reinstate their lapsed policies extending policy benefits on revival.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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