Since the onset of the COVID-19 pandemic, there has been an increased emphasis placed by the Indian masses on life insurance products with many young citizens purchasing life insurance covers for the first time. Despite this, data aggregated from private insurance companies suggest that nearly 29% of the insured base has lapsed policies due to failure to pay the insurance premium on time. This is largely attributed to a general lack of awareness about the importance of timely premium payment rather than financial stress preventing them from continuing their insurance plans.
Let us look at certain steps that should be taken to ensure you continue to enjoy the host of safeguards that come inbuilt with life insurance plans.
Tracking your policy premium payment date is the first step towards ensuring your life insurance plan doesn’t lapse. You can choose to pay up to 30 days prior to the policy expiry but should not delay beyond 30 days after the due date. Your insurance provider or agent would do their part in informing you about this date via post, phone, email, SMS, or other preferred modes, but it would be advisable to set an automatic reminder for an added safety net.
If your premium is overdue by more than 30 days, call your provider immediately and make the payment at the earliest to avoid additional penalties. As per IRDAI norms, for premium payments received after the policy has elapsed, an interest of 9% p.a is charged on the premium amount from the due date and added to the overdue amount. Post clearance of this cumulative premium amount, the insurance plan will be reinstated by your provider and should be confirmed in the form of a revised policy document. For ULIP holders, if payments are not made even after 45 days from the due date, it will lead to premature closure of the plan with a considerable financial impact in addition to discontinuation of the insurance cover.
In case you haven’t renewed your policy even after 180 days from the due date, the insurance provider would require you to submit a Good Health Declaration along with a duly filled COVID questionnaire. For those with existing medical conditions, there may be a surplus requirement of undergoing medical tests and procedures to re-ascertain your current physical fitness level. In some cases, the premium may get revised based on the findings of these tests and the policy cover is reinstated only after the new premium amount is paid.
Setting up automatic payments is highly recommended to enjoy complete peace of mind and ensure you don’t suffer from any of the above inconveniences. This can be done by enabling the autopay option through your insurer’s web portal and can be configured with multiple payment options including Net Banking, Digital wallets, UPI Apps and Credit/Debit cards. Through this feature, the premium amount gets debited from the respective account/wallet on the due date and enables you to continue enjoying the complete policy coverage without any last-minute hassles. Only in the scenario where adequate funds aren’t available will the autopay route fail and trigger a message to your registered email ID for further action.
If done within the prescribed timelines, your life insurance plan will continue to provide your loved ones with a security net to fall back on in times of need. It is, thus, important to adopt a long-term mindset when opting for any life insurance product and it necessitates basic discipline to be maintained in terms of premium payment and medical reporting.
(By Subashish Acharya, Chief Distribution Officer, Future Generali India Life Insurance Company Ltd)