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Financial Planning
Grace period & policy lapses: What happens when you miss a premium payment
Hectic lifestyles catchs up even with the best of us. Perhaps you’ve been travelling for business, there’s been a family emergency, or you’ve simply been working on too many projects at the same time. When life gets busy, even the most organised among us forget to pay their insurance premiums.
But here is the good news: most insurance policies in India have a built-in safety net called a grace period.
What is grace period?
A grace period is an insurance cushion. To put it simply, it’s 15 to 30 extra days after your payment deadline when your policy keeps going even if you have not paid the premium. Most of the time, this little window can literally be a lifesaver when disaster strikes.
Grace period overview
| Insurance type | Grace period | Coverage active? |
|---|---|---|
| Life insurance | 15-30 days | Yes |
| Health insurance | 15-30 days | Yes |
| Motor insurance | 0-30 days | Sometimes (varies by provider) |
When policies lapse
If you fail to pay toward the close of the grace period, your policy will be cancelled. Your insurance will no longer function, and you will lose all the benefits you have accumulated. In those instances, it can be hard to reinstate a lapsed policy – insurers may require medical tests, impose penalty charges, or even reject your renewal.
For example, consider Mr. Gupta’s case. The premium for his term policy was due on 10th June. However, he did not pay it but remembered on 25th June. Fortunately, as his policy had a 30-day grace period, it did not lapse when he paid on 25th June. But if he had postponed payment till after 10th July, his policy would have lapsed.
Conclusion
Grace periods exist to help, not to be abused repeatedly. Even though they grant you some freedom during hectic moments, you should always pay your premium timely. By familiarising yourself with these rules and staying well-prepared, you can keep your family’s economic stability in top condition and avoid avoidable worry.
Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.
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