Term insurance is beneficial for all. It helps you secure your family’s financial future. But, to ensure that your family enjoys its benefits, you must not let the policy lapse. Here are a few steps to ensure that your term plan remains active.
When it comes to insurance policy, especially term insurance, you may not want to let your policy lapse. What does a term policy lapse mean? How does it affect you? In simple terms, term insurance policy lapse implies that the policy is not valid anymore. And, that you don’t get any protection or policy benefits. This means, in the event of your unfortunate demise, the family will not receive any death benefit and they may be left financially vulnerable.
As a policyholder, no one would want to lose their term insurance benefits. So, to avoid the risk of your term insurance policy getting lapsed, here are a few things that you must do.
Pay the premium on time
According to insurance companies, one of the major reasons why most term policies lapse is because of non-payment of the premium. So, if you have purchased a term plan, make sure that you go through the policy papers, and take note of the renewal date and renew the policy on or before the due date.
If you are unable to make the payment on or before the due date, it is advisable to inform the insurer about it. Generally, most insurance companies provide a grace period of 30 days to allow the policyholders to pay the premium and renew their policy. You can pay the premium during the period and avoid the risk of your policy getting lapsed. If you pay during the policy period, you can avoid paying the late payment fees.
Set up automatic payment for your term insurance policy
Non-payment of even a single premium can lead to the policy getting lapsed. This can have a significant impact; you not only risk losing the policy benefits, but also the premiums you paid earlier. In case of late payment of the premium after the grace period, you may have to go through the full purchase process again, i.e., re-submission of the documents, undergoing a medical examination, etc. Besides, there is also a risk that you may have to pay a higher premium for the same coverage.
It is easy to forget paying the insurance payment considering your busy schedule. But, one of the best solutions to avoid missing any premium payments is automating the same. You can provide a standing instruction to your bank to auto-debit your account with the premium amount on a specific date of the month/year. You can do this online through the bank’s website or mobile application.
If your bank account is linked to your Aadhaar card, you can also set-up automatic payment through e-NACH.
Ensure that your communication details are updated
When you purchase a term insurance policy, you must provide your communication details, including telephone number, email Id, current address, mailing address etc., to the insurance company. The insurers use these details to send you the policy-related details. You may choose to receive the communication from the insurer, including reminders for the premium payment through email, text message, or post.
So, in case you have changed your phone number, email address, or residence address, it is vital that you update the same with your insurer. This will ensure that you get timely reminders and you don’t miss paying the premium. You can update your details with the insurer online through their customer portal or you can visit the office and give a written application to update the change of communication details.
Final Word
Missing your term insurance premium payment would mean you risk policy lapse and losing the coverage. Being disciplined with your premium is the best way to keep your family protected from the financial hassles during your absence.