What you need to know about renewing your expired health, life, and auto insurance policies
It is always a good idea to upgrade your insurance policy before it expires since this will help you prevent any financial consequences.
Rakesh Gulati’s family had only two months ago pleaded with a life insurer not to deny their claim and instead pay the amount assured so that the family could meet their daily expenses. On his way home from work in Gurugram, Rakesh, a 38-year-old software engineer, was killed in a car accident. Rakesh died after several years of paying the premiums on his term life insurance policy, which he bought in 2015. Unfortunately, the insurer informed Rakesh’s family that the last payment on his term life insurance policy had gone unpaid, causing the policy to lapse and the claim to be denied.
The family was devastated to hear that Rakesh’s life insurance policy had lapsed, as the missed value amounted to nearly a crore. Rakesh’s family is only one of many others who have faced insurmountable financial difficulties due to lapsed life, health, or auto insurance policies. Because insurance policies fail to meet the needs of the person who carries them and their financial dependents, they result in the loss of a large number of benefits associated with the coverage.
Both insurance plans, whether life, health, or auto, have an expiration date, and if the policyholder forgets to renew it before that date, the policy will expire. A lapsed insurance policy is the same as getting no policy since the policy’s coverage is no longer accurate. When the policy expires, your insurer will no longer be able to help you financially. As a result, it is recommended that you always renew your insurance policy before it expires, as this will help you prevent any financial consequences.
If, however, one of your insurance plans has lapsed due to unforeseen circumstances, there are ways to review or renew your lapsed insurance policy and ensure that you and your loved ones are once again covered financially.
Life Insurance Term
When you purchase a term life insurance policy, you have the option of paying the premium in monthly, quarterly, or half-yearly instalments or one lump sum payment once a year. You can select any of the options based on your budget. When you stop paying your term life insurance premiums, the policy becomes void, but it does not become lapsed. If you pay your premium in monthly instalments, you have a grace period of 15 days, and if you pay your premium quarterly, half-yearly, or yearly, you have a grace period of 30 days to re-activate your term contract. You will still have to renew your term insurance if you do not pay the renewal.
A policy issued before December 2019 is entitled to a maximum renewal period of two years. A policy issued after this date is eligible for a maximum renewal period of five years, after which the policy lapses. Term life insurance policies that lapse must be revived by new policies that pay all outstanding premiums since the first unpaid one up to the revival date, along with interest on outstanding premiums and applicable taxes and levies. In some cases, the insurance company may keep you under examination to renew your policy.
Health Insurance Policies
An individual’s health insurance policy lapses when they cease membership due to a new waiting period for normal and pre-existing illnesses, as well as the loss of any no-claim bonus accumulated. It is always advised to buy early so that the waiting period is served at the right time. The insurer gives you a 30-day grace period to renew your health insurance policy if you cannot renew at renewal time. The policy becomes active again if the premium and renewal are paid within 30 days. If you fail to renew the policy during the grace period, the policy is lost forever. If you are not covered by health insurance, you will only have a choice to purchase a new health insurance plan and serve a new waiting period.
Insurance Policy for Motor Vehicles
If you do not wish to risk your no-claim bonus, you must reinstate your lapsed motor policy within 90 days, or you will forfeit the entire no-claim bonus, which can be worth up to 65 per cent of the own damage premium and can be worth several thousand dollars in the case of a mid-sized car. You may contact the insurer directly or via intermediaries to renew a lapsed policy. Furthermore, given the ongoing COVID-19 pandemic, you could use the self-inspection video function to verify the physical condition of your car. You can use this feature to update your policy by uploading a video and pictures of your car on the insurer’s app. IT will update your insurance within hours without contacting the agent.