Bought a life insurance policy but couldn’t continue making the premium payments due to financial crunch? Well, you can reinstate it once the finances are back on track. Generally, insurers offer two years revival period for the insured to reinstate their policies.

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Non-payment of premiums leads to policy getting lapsed. This means it will no longer pay a death benefit or offer any coverage for the insured person. Hence, it is advisable to revive it once liquidity issues are resolved, say experts.

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However, this comes at a cost.

"For revival, the policyholder is bound to bear a renewal fee along with late fee and additional interests/penalties on the last two years due premiums," explains Rakesh Goyal, director, Probus Insurance, Insurtech Broking Company.

The insurance company may even ask for a medical examination again in case of the term insurance policy. However, some insurers may waive these conditions, especially during revival campaigns.

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"They may also waive the need for medical check-ups, and reduce the penalty charge or waive it completely," says Naval Goel, chief executive officer and founder, PolicyX.

If it is a LIC policy, then the customers have some relaxation as the company policyholders who bought their policies post-January 1, 2014, can revive their non-linked policies within five years and unit-linked policies within three years of first unpaid premium.

Nevertheless, many companies also regularly launch revival campaigns that allow the customer to revive their policies even after two years with some conditions that vary from insurer to insurer and plan to plan, according to Goel.

In case of IDBI Federal Life Insurance, customer can revive the policy by only paying the renewal premium due when the lapse day is not more than 180 days.

"For policies issued prior to December 2019, the revival period is 2 years, post which the policies get terminated. For products approved after December 2019, the revival period is 5 years for traditional policies and 3 years for unit-linked plans as per IRDAI regulations," says Lalitha Bhatia, Chief Operating Officer, IDBI Federal Life Insurance.

Tata AIA Life Insurance, meanwhile, says they launch campaigns to enable revival of policy without interest, understanding that their customers may be going through unforeseen challenges if they have missed paying the premium on time.

"Customers simply have to furnish details of the eligible policy, pay the late payment fee and policy can be instantly revived. Contingent to the nature of the policy and lapsed period, there could be a need for a health declaration," explains Yusuf Pachmariwala, EVP and Head of Operations, Tata AIA Life Insurance.

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First Published:Aug 11, 2020 3:34 PM IST