How To Keep Your Life Insurance Policy From Lapsing
A life insurance plan is an asset. It helps in manifold ways. From keeping your life covered to offering a financial cushion to your family in your absence to helping you invest in a safe way, you can get immense value out of your life insurance policy. However, to get the benefits out of a life insurance cover, you need to pay the premium on time and keep the policy active. Neither can a claim be made and a lapsed policy nor can any bonuses be availed. This is why you should be very diligent and disciplined with your life insurance premium payments.
In this article, we list some interesting ways in which you can keep your life insurance policy from lapsing. Take a look.
Set up an autopay option
It is an excellent idea to set up an autopay option with your bank. What you have to do is ask your bank to automatically send a sum of money to the account of your insurance provider on a fixed date each month, quarter, or year, depending on what your premium paying term is. Fix the date a few days before the actual policy expiration date so that you have a healthy buffer to rely on. The sum of money you choose should be equal to the volume of your life insurance premium.
When you have an autopay option set up, there is practically zero chance of you missing your life insurance premium due date. Many times the policy lapsed because the policyholder genuinely forgets to pay the premium by the due date. Stay away from these perils by making use of the very effective autopay option.
Opt for annual premium payments
There are many ways in which you can pay the premium of your life insurance plan. Every life insurance company in India gives you the option of paying the premium of the plan annually, bi-annually, quarterly or monthly. To avoid your plan from getting lapsed, a good tip for you is to choose the annual premium payment mode. Do not opt for monthly premiums if you are forgetful or have a history of getting your policy lapsed. Annual premiums need to be paid just once a year and that is easier for you to remember.
Also, when you opt for a limited premium payment term, you get a slight discount on the premium. This makes it more affordable for you and keeps away the financial problems that may hold you back from paying the premium on time. Be wise with your selection and you will be able to keep your life insurance plan from lapsing.
Opt for a limited premium payment term
Many types of life insurance plans, including term insurance plans and ULIPs, give you the chance to pay your premium within a few years, under the limited premium payment option. This is a good option to choose. Once you finish the limited premium paying term, you do not have to worry about paying or forgetting to pay premiums any longer and your policy lapsing because of any default in payments. This is a very handy way to ensure your policy remains active at all times.
If you want to go for the limited premium payment option, purchase your life plan with care. Do your research and see which plan offers this feature. Not every life insurance plan from every life insurance company has this feature, so be cautious while making a purchase.
Reassess the riders
Let us look at the example of Ms Yasmeen to understand this point better. Ms Yasmeen, a 27-year-old lawyer, had a life insurance plan mainly because she had dependent parents and she also was repaying a home loan. She had purchased an endowment life insurance plan. Along with it, she also purchased various riders such as the critical illness rider, the accidental death benefit rider and the waiver of premium rider. However, since the riders need to be purchased at an extra cost, the overall premium of Ms Yasmeen’s life insurance cover went up considerably. This almost made the plan too expensive for her. She could not pay the premium on time and this led to her life insurance cover lapsing.
If you too are unable to pay the premium due to the affordability factor, reassess the riders that you have. Drop a few riders and that may help to lower the premium amount. Then, you can pay the premium on time without it becoming a financial liability for you. Understand the scope of each rider and only retain the ones that you really need.
Set up reminders at various places
And last but not the least, set up reminders at multiple places. If your policy renewal date is October 24, set a reminder on your phone a week in advance. Highlight the date on your desk and wall calendars as well. Then, request your insurance provider to send you reminders via email and text messages. Ensure your phone number and email IDs are updated as per the records of the insurer. When you receive multiple reminders about your life insurance policy renewal, you will get the renewal done in all probability! And once that is done, you won’t have any issues in keeping your life insurance plan from lapsing.
To sum it up
It is not very difficult to keep your life insurance plan from lapsing. All you have to do is become organized and disciplined. Once that is done, you can surely pay your premium on time and keep your life insurance policy active at all times. Life is very unpredictable and you can never quite know what danger lies at the next corner. So be prepared for everything and pay your life insurance premium on time. If your policy remains in a lapsed state for even one day and on that very day something happens to you, your family won’t be able to make a claim on the plan. Be diligent and clear all the dues right away.