The policy contract provides a ‘grace period’, which gives the policyholder an additional period of time after the due date for the payment of the premium. During this period, policyholder can still pay his/her premium and the life policy still continues to be in force. For monthly mode of payment, the grace period is usually 15 days, while for other frequency of payments (semi-annually or annually), it is usually 30 days. (For exact grace period – please check term and conditions of your policy)
What is Grace Period?
Policy holders are expected to pay premium on due dates. A period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace or grace period.
How does ‘Grace Period’ affect you?
- During the grace period, if the policyholder dies, even if the premium due was not paid, the policy is in force and a valid claim would be paid in full, minus the amount of premium due.
- After the grace period, the policy does lapse after the grace period and at that point there is no death benefit paid.
If your life insurance policy lapses after the grace period, the insurance company will allow a reinstatement. At the time of revival, the insurer might impose lots of conditions or even decline your request for a policy revival, if the company is not convinced about the honesty of your application on grounds of suspected fraud or the like. It can be very likely that the insurer will ask you to appear for a medical test before the policy can be revived to ascertain whether you have developed a new medical condition during policy lapse that might expose the insurance company to a high risk in insuring your life.