Prajna Capital - An Investment Guide

Policy Lapses In Ulips Higher Than In Traditional Products: Irda DOMESTIC life insurers may have to adopt a uniform definition for lapsation of insurance policies to give more leeway to policy holders on premium payments. The insurance regulator Irda has recommended a uniform grace period of 30 days for policy holders paying their premium every quarter, half-year or every year. A 15-day grace period has been suggested for policy holders paying monthly premium. An insurance policy lapses when the subscriber does not pay the premium within the grace period. IRDA has recommended re-instatement of a policy if the premium is paid within the revival period of two to five years, as per the internal practice of the insurer. Currently, companies have varying definitions on lapsation of policies and this creates a lot of confusion. The suggestion for life insurers to adopt a uniform “ grace period ” and “ lapse definition ” has been made in Irda’s first occasional paper on “Lapsatio...