Insurance
•01 min read
Welcome to our brand-new series, A-Zs of Insurance. In this series, we will venture into the world of insurance to breakdown insurance jargon for you, so you’re empowered to make informed decisions about your financial security.
Imagine this - Kabir bought a term insurance policy in 2023. He needs to pay an annual premium of ₹15,000 for 15 years to keep his plan active, the due date for which is the 31st of May each year.
In 2024, Kabir got caught up in a medical emergency and forgot to pay his premium by the due date. He realised the delay after a few days and got worried about his policy lapsing.
He contacted the insurer and was told he could keep his policy active by paying the premium within the grace period. Let’s look at what this means.
The grace period is given after the premium due date and before your policy becomes inactive due to non-payment. It typically lasts for 15 to 30 days. The exact timeframe will be specified in your policy.
Let’s look at Kabir’s example again. His policy specifies that the grace period lasts for 15 days after the due date. So, his insurer asked him to pay the pending amount by 15th June 2024, which he did. His policy did not lapse.
Please read the terms and conditions of your policy carefully to understand how the grace period applies to you.
Once you buy an insurance policy, you’re required to either renew it each year or regularly pay the premium to keep your coverage active. If you don’t pay your premium by the due date mentioned in your policy document, your insurance cover can lapse.
To ensure this doesn’t happen, the insurer offers you a grace period i.e. an extra window of time to pay the due premium, so you can enjoy uninterrupted coverage.
Note: The insurer may charge an additional penal fee, along with the pending premium.
