There are many individuals who let their life insurance policy lapse for one reason or the other. Some travel abroad, the others can no longer afford the premium, while others have taken too many insurance policies to initially save tax and now cannot pay the premium.
However, remember that you have paid money through premiums and it is best to now revive the life insurance policy, provided you are happy with the present terms and conditions of the insurance company.
There are two ways in which your life insurance policy could lapse. One is that you have not paid the premium for many months and the other is withdrawal through the cash surrender value. This is the amount that the insurance company will pay you if you terminate your policy and especially whole life insurance policy voluntarily before the policy matures.
How to revive a lapsed life insurance policy?
There are various ways in which a policy can be revived. It all depends on the time frame involved. Let's study them in some detail.
In this case if you have not paid premium for the last six months or so, you can pay and revive the policy. There would be a rate of interest that would be applicable. Also, you do not have to bother much on a health check-up being done again.
If the policy has been revived after a longer duration the Life Insurance company may ask you to undergo a health check-up all over again. This is because your health condition could have changed during the time period. Also, a fresh contract will ensure that the suicide pact of one year would now apply to the new contract. This means that amounts would not be paid if there is a suicide within one year from taking a fresh policy.
The insurance company may also conduct a series of investigations if you die within two years from the date of the new policy.
The best thing to do is to be transparent wit your life insurance company. Tell them if there is an illness that you need to disclose. Also tell them the reasons for lapsing an earlier life insurance policy. The more transparent you are, easier it becomes for the nominee to claim benefits in case of death.