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Let us say you miss paying the premium on your life insurance policy, and as a result, your policy has lapsed. For people who may find themselves in situations like this, life insurance companies offer a small window of opportunity to revive the policy during the revival period.

The rules state that insurers need to offer a revival period of at least 2 years within which you can reinstate your policy. Here is how you can revive a lapsed life insurance policy.

When do insurance policies lapse?
A policy lapses when you skip paying its premium, not just on the due date but even within the grace period—which is typically a month. However, not all policies lapse automatically. For instance, a term insurance policy lapses if you skip paying the premium. In this case, you forfeit the insurance benefit as well as the premium paid towards the policy thus far.

In the case of a unit-linked insurance plans (Ulips), if you skip paying the premium in first 5 years, or during the lock-in period, the policy is considered lapsed and the insurer moves the money (or the fund value) to the discontinuance fund and levies a discontinuance charge—which is a maximum of Rs6,000 if discontinued in the first year, and reduces to Rs2,000 in the fourth year, and nil thereafter. If you skip paying premiums after the lock-in period, the insurer lets you choose between surrendering the policy, reviving it or converting it into a paid-up policy with reduced sum assured.

In the case of traditional plans, if you don’t pay the premiums before policy becomes paid-up—that is, before it acquires a surrender value—you risk forfeiting all the premiums. However, once the policy is paid-up, the policy doesn’t lapse but automatically continues with a reduced sum assured (read more about paid-up policies here).

How to revive a lapsed policy
In all of these cases, insurers may give you a window of at least 2 years to revive the policy. In the case of Ulips, insurers will reverse the discontinuance charges that were levied upon revival. After 2 years, insurers may not entertain a request for revival, especially if it’s a term plan because it comes with a very high insurance cover. But insurers do relax these rules on a case-to-case basis.

The ease of reviving a policy will depend on the time that’s passed since the policy lapsed. In case of an early lapse, that’s within 6 months, insurers may even allow you to revive the policy online on the basis of a declaration of good health. However, if the policy has lapsed for more than 6 months, then insurers may insist on fresh medical check-ups. This will also depend on the sum assured and your age; of course, the older you are and the higher the sum assured, more are the chances of being sent to medical tests. In order to revive the policy, you will need to pay all the due premiums, along with penalty interest. But insurers sometimes waive these conditions, especially during revival campaigns. They may also waive the need for medical check-ups, and reduce the penalty charge or waive it completely.