Better Safe than Sorry
Policyholders must make sure that they pay their premiums on time or else they may have to face the wrath of the insurance companies.
August 29, 2011 / 15:46 IST
Policyholders must make sure that they pay their premiums on time or else they may have to face the wrath of the insurance companies
Sanjeev Patel, software professional and the only working member of his family comprising two kids and his wife had taken a traditional life insurance policy for the security of his family, as they are all dependent on him.This policy is seven-years-old and Patel ensured that each of the premium payments were made in a timely manner. One day on the way back from work, in a very tragic incident while crossing the road, he met with an accident and lost his life. Fortunately for his family who were entirely dependent on his income, the sum assured on his policy helped them overcome the financial loss.If it were not for the timely payment of premiums by Patel, his policy would have lapsed, causing immense financial strain to his family as the insurance company would not have been liable to make any payments to the family and they would have found themselves in a situation of financial strain.
Note that insurance companies honour the commitments if and only if the policy is active. Hence, in a traditional life insurance policy if you have paid the premium for three years and missed the premium for the fourth year, the policy becomes inactive. Even though we know its importance - security to family members, insurance companies indicate that many policies lapse.It could be due to various reasons. But carelessness tops the list. In order to ensure that the policyholder remembers to pay the premium, insurance companies send a reminder for premium payment wherein they also mention the grace period within which the premium should be paid.For monthly premium payments, the grace period is 15 days and for quarterly and annual payments it is 30 days. If you fail to pay the premium even within the grace period, the insurer sends a communiqu
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