Since the start of the COVID-19 pandemic, the Indian masses have placed a greater emphasis on life insurance products and many young citizens are purchasing life insurance coverage for the first time. Despite this, aggregate data from private insurance companies suggests that nearly 29% of the insured base have expired 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 payment of premiums rather than financial strains that prevent them from continuing with their insurance plans.
Let’s look at certain steps that must be taken to ensure that you continue to enjoy the many safeguards that come with life insurance plans.
Tracking your policy premium payment date is the first step in ensuring that your life insurance plan does not expire. You can choose to pay up to 30 days before the expiration of the policy, but it should not be delayed more than 30 days after the expiration date. Your insurance provider or agent would do their part to inform you of this date by post, phone, email, SMS, or other preferred modes, but it would be advisable to set an automatic reminder for an additional safety net.
If your premium is more than 30 days past due, call your provider immediately and make payment as soon as possible to avoid additional penalties. According to IRDAI rules, for premium payments received after the policy has expired, interest of 9% per year is charged on the amount of the premium from the due date and is added to the amount due. After settlement of this cumulative premium amount, your provider will reinstate the insurance plan and it must be confirmed in the form of a revised policy document. For ULIP holders, failure to make payments even after 45 days from the expiration date will lead to premature closure of the plan with considerable financial impact, in addition to the interruption of insurance coverage.
In case you have not renewed your policy even after 180 days from the expiration date, the insurance provider will ask you to submit a Declaration of Good Health along with a properly filled out COVID questionnaire. For those with existing medical conditions, there may be an additional requirement to undergo medical examinations and procedures to re-determine your current fitness level. In some cases, the premium may be revised based on the results of these tests and the policy coverage is reinstated only after the new premium amount is paid.
It is highly recommended to set up automatic payments to enjoy complete peace of mind and to ensure that you do not suffer from any of the above inconveniences. This can be done by enabling the automatic payment option through your insurer’s web portal and can be configured with multiple payment options, including Net Banking, digital wallets, UPI applications, and credit / debit cards. Through this feature, the premium amount is debited from the respective account / wallet on the expiration date and allows you to continue to enjoy full policy coverage without last minute hassles. Only in the event that insufficient funds are available, the automatic payment route will fail and generate a message on your registered email ID for the necessary action to be taken.
If done within the prescribed time frames, your life insurance plan will continue to provide your loved ones with a safety net to turn to in times of need. Therefore, it is important to adopt a long-term mindset when opting for any life insurance product and it is necessary to maintain basic discipline in terms of paying premiums and medical reports.
(By Subashish Acharya, Director of Distribution, Future Generali India Life Insurance Company Ltd)