What Happens If Insurance Premium Is Not Paid on Time?

1. The 15–30 Days Grace Period Window

Under IRDAI regulations, insurers must provide an extra time window after the official renewal due date:

• Monthly Payment Mode: 15 days grace period.
• Quarterly / Half-Yearly / Annual Mode: 30 days grace period.

During the grace period, your insurance coverage remains 100% active. If a valid death claim or hospitalization occurs during the grace period, the insurer will pay the claim after deducting the unpaid renewal premium.

2. What Happens When the Grace Period Expires? (Policy Lapse)

If the premium is not paid before the grace period ends:

• Loss of Risk Cover: In term life insurance, if the policy lapses and death occurs, the nominee receives zero payout.
• Loss of Waiting Period Credits in Health Insurance: Your pre-existing disease (PED) waiting period clock resets to zero. You lose all accumulated credits earned over previous years!
• Loss of No Claim Bonus (NCB): In motor insurance, if you do not renew within 90 days of expiry, your accumulated 20% to 50% NCB discount is permanently lost.
• Loss of Tax Benefits: Unpaid premiums cannot be claimed for tax deductions under Section 80C or 80D for that financial year.

3. How Can You Revive a Lapsed Insurance Policy?

Insurers allow a revival window (usually within 2 to 5 years of lapse for life policies, and up to 30-60 days for health policies):

1. Pay all outstanding unpaid premiums along with accrued interest penalties (typically 8%-10% p.a.).
2. Submit a fresh Declaration of Good Health (DGH).
3. Insurers may require fresh medical health check-ups if the policy has been lapsed for an extended period.