An insurance policy is termed to be as lapsed if the premium amount becomes due and it is not paid even within the grace period. A fixed amount of time is agreed upon by insurers and insured which defines the premium paying date of the policy. If by any reason the insured fails to pay these premiums and does not respond even in the grace period the policy is considered to be lapsed.Buying insurance policy is a great investment but one has to make sure the premiums are paid on time to avoid any type of lapse.
Grace period is the time-frame of 15 or 30 days from the date when the payment of premium is due. As per the rules laid by Insurance Regulatory and Development Authority (IRDA), grace period is 15 days for monthly payments, whereas for payments that are made on quarterly, half yearly and yearly basis, the period is elongated to consistent 30 days. When the policy is lapsed, the coverage is restricted and all the due benefits are cancelled. This denotes that the benefits attached to the life insurance policy that is, death and accidental benefits are not provided. Moreover, bonus accumulated and premium paid is forfeited.
As a result, all the efforts put in to pay previous premiums go waste and family is rendered support-less in times of need. To avoid this to happen with you, make sure that you never miss to pay your premiums on time. Even if you have missed the deadlines you can again make it up by reviving your insurance policy. But there are certain norms to be followed which may differ from company to company and policy to policy.
Regulations to revive the lapsed policy depend upon the period for which the policy continues to be lapsed. In case, you missed the due date, you are allowed to pay the premium within the grace period.
In case the grace period is missed too, re-instatement period of six months follows. You may not be able to avail the benefits but you still have the chance to revive your life insurance policy within this stipulated period of six months.
How insurance policy is revived?
In many instances, the person needs to pay only the outstanding premium and interest levied on the amount. But again, every company has a different rule for revival and penalties can be imposed for the same.
So, you may be required to submit the proof of you owning the policy and KYC documents also along with the penalty amount. In certain cases, you may be asked to go through the health check-up procedure once again to attain the same coverage. Thereby probabilities increase that the rate gets revised and you are asked to pay the increased premium.
If you have been punctual in making payments for more than three years, you are entitled to get revival period of 2 years. That means, if you paid the premium for 3 years in line or more 
and you happen to miss the grace period, your policy is not lapsed. Instead the value of your policy gets reduced. This is termed to be as paid-up policy. You do not lose your accrued bonus also as it is paid to you on a pro-rata basis.
Insurance policy getting lapsed means lapsed-protection and this can prove to be hazardous for your family's long term financial health. To keep away from these problems you should make a point to pay the premium and never ignore the reminders you get from your insurance company personnel.
Well, nobody purposefully misses to make such important payments. It is due to the complications in the life of the person that he has to go through the tough phase or he fails to notice the importance of insurance policy bought. Therefore, many times insurance companies do come up with easy solutions and invite people to reinstate their lapsed policies. There you stand for a higher chance to revive your protection plan and pay the same premium as before and the insurer might give up on penalties as well, if you are lucky enough.
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