Missed your insurance premium? Here's what you need to know

In the hustle and bustle of modern life, it's not uncommon for even the most responsible individuals to overlook something crucial. At times, that something crucial can be their insurance premium payment.

The importance of insurance is known to many, if not all - whether it's safeguarding our loved ones with term insurance or shielding ourselves with health coverage. So, what transpires when you miss a premium payment? It's a question that lingers in the minds of many. Let's explore.

Understanding grace period
When you miss your premium payment, a grace period comes to your rescue. Typically, it is 15 days for monthly premium payments and a generous 30 days for all other payment intervals, such as quarterly, half-yearly and yearly. You can pay your missed premium within this grace period.

For health insurance
During the grace period, your policy doesn't lapse immediately, but the coverage remains in a state of limbo until the premium is settled. You retain the continuity benefits, including the coverage of pre-existing diseases and conditions, but claiming any insurance benefit is contingent upon clearing the outstanding premium.

However, should you fail to pay the unpaid premium within the grace period, your health insurance policy is considered cancelled. In such a situation, you will need to purchase a new health insurance policy and go through the waiting period once more.

Nevertheless, there is a possibility that certain insurers may consider reviving your policy under only specific requests and conditions. This would be at the discretion of the insurer and could involve undergoing the entire underwriting process once again.

For term insurance
Your insurance coverage remains intact during the grace period. It's recommended to pay your premium within this timeframe to avoid late fees. If you miss this window, you still have a chance to revive your policy.

You can revive the policy within the period stated in the policy's terms and conditions. However (as checked by us), some prominent insurance companies like ICICI and Max Life state that the policy can be revived within five years from the due date of the first unpaid premium until the policy's termination date.

But, it is important to note that reviving a lapsed policy involves paying the overdue premium with late fees and going through the underwriting process again, potentially affecting your premium and coverage.

Note: In case of an unfortunate event of the insured's demise during the grace period, the insurance company will deduct the unpaid premium from the benefits payable under the policy. It's a crucial reminder that your protection endures, but prudence dictates meeting the premium obligation within the grace period.

Ways to avoid missing your premium payments
Now that you understand the implications, how can you ensure timely premium payments and safeguard your financial security?

• Date tracking: Set reminders to stay vigilant about due dates. Most insurance companies offer timely reminders, and they extend a grace period if you miss the date.
  
• Automate payments: Consider setting up automatic payment mandates with your bank to ensure seamless premium payments. While this is convenient for term insurance, health insurance might require fresh bank mandates as its premium changes every year depending on parameters like age.

Remember, a lapsed term policy can be revived, but terms may not be ideal. If conditions are unfavourable, consider buying a new term policy for uninterrupted coverage. These strategies keep your financial safety net intact. Keep premiums paid within the grace period - your protection will be there when you need it most.

Also read: The necessary insurance