Have you ever considered the implications of what happens to the benefits covered under an insurance policy if the insured dies during the grace period? This is the additional duration that is available to the insured individual to pay the premium after its due date.
Generally, most insurance companies provide 30 days grace period for the policyholder to pay the premium post the due date. However, if you fail to pay the premium even during this additional period, the insurance cover lapses and you will lose all the benefits available under the plan.
Implications in case of death during grace period
The first question that comes to mind is will the death benefits under the life insurance plan be available in case the insured person passes away during the grace period? According to the legal guidelines, the policy continues to remain valid and the beneficiaries are entitled to the benefits if the holder dies on the due date of the premium or during the additional 30 day grace period. However, the amount of the unpaid premium is deducted while offering the benefits under the policy.
To understand these implications better, take a look at the following representation;
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Death occurs without paying the due premium |
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Prior the due date |
During the grace period |
Post expiry of grace period |
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Full benefits under the plan are available to the beneficiaries |
Full benefits after deducting the amount of the unpaid premium are payable to the beneficiaries |
No benefits are payable since the policy is considered as Lapsed |
Creating awareness
There are several instances when the death of the insured occurs during the grace period. However, most often the beneficiaries are unaware about the rules, and hence they do not file any claim to receive the benefits under the life insurance plans in India availed by their family member. This is why it is crucial for people to read the terms and conditions in the policy document and know about their responsibilities and rights.
Implications of failure to pay timely premium
Most insurance policies in India include a grace period during which policyholders can pay the unpaid premium amount. This period is 15 days for monthly premium and 30 days for semi-annual and annual premium. All the benefits and insurance cover continue to be valid during this period. However, if you fail to pay the premium during this time, the insurance cover is cancelled and reviving the lapsed policy requires fulfilling certain stipulated conditions within a specified duration.
About HDFC Life
HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions.
