What Happens If
Insurance Policyholder Dies Within The Grace Period ?
Every life insurance
company provide a grace period of 30 days for paying the premium after the due
date is over. Companies send reminders on SMS & E- mails to make sure the
customer pays their premiums on or / before the due date, but if they forget to
pay the premiums on time, still they get 30 days of grace period.
If premium are not
yet paid after the grace period, then the policy is considered to be LAPSED and
no death benefits will be given if the death happens after the grace period.
Do you get sum
assured if death happens during grace period ?
And the answer is Yes .
As per the Insurance
rules, if the death of the policy holder occurs on the due date of the premium
payment or / during the grace period, still the policy is valid & the
beneficiaries will get the sum assured, but after deducting the the unpaid
premiums.
So if a person has
taken a Rs. 1 crore term plan for a 30 years period with premium Rs. 10,000 per
year on 18th december 2009 and imagine the policy has run for 4 years , and now
its the 5th premium is to be paid on 18th december 2014.
The grace period will
be upto 18th January 2015. Now if the premium was not paid and the death
happens on 19th December 2014, then its during the grace period.
How much will be the
sum assured paid to the policy holder family ?
It would be Sum
Assured – unpaid premiums
= Rs. 1 crore – (26
yrs * 10,000)
= Rs. 1 crore – 2.6
lacs
= Rs. 97.4 lacs
While its a good
thing that the family will still get a big enough amount, you can see how a
little delay still costed Rs. 2.6 Lacs to the family, because the person did
pay his premium on time.
Payment of Sum
Assured if death happens during grace period
There have been a lot
of cases, where a person just discontinued his policy for some reason &
they faced an accident and died. Internet is full of these kind of cases. A lot
of times death happens during the grace period and because the family is not
well educated on this aspect, they do not know that they are still liable for a
claim.
So make sure you do
not forget to pay your premiums & make sure you do not wait for the
reminders from the insurance company. You can set up your own reminders and be
more alert and proactive on this.
LIC of India Said in its web site ( https://www.licindia.in/policy_conditions.htm) ''A grace period of one month but not less than 30 days is allowed where the mode of payment is yearly, half-yearly or quarterly and 15 days for monthly payments. If death occurs within this period, the life assured is covered for full sum assured."
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