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Due to our hectic lives, we may sometimes forget to pay our insurance premiums on time. To safeguard the interests of the insurer, the insurance company provides a grace period to pay the premium before the existing policy becomes invalid. This grace period varies from company to company, it usually varies between 15 -30 days.
A health insurance grace period is the specified number of days that the insurance company provides to the insurer to pay the premium after its due date. The grace period could be between 15- 30 days. Post that, if the insurer fails to pay the premium the insurance company may choose not to accept the policy renewal application.
Most insurance companies will refuse the claims made by the insurer during the grace period.
Mr. Raj’s health insurance policy has expired on 6th December 2019. His insurance company provides him with 30 days grace period, which means Mr. Raj has to pay his premium latest by 6th January 2020 or his policy will turn invalid. If Mr. Raj makes a claim during this period, the insurance company will reject the claim and Mr. Raj will not get any coverage.
Similar to the above scenario, if you have failed to pay your car insurance premium on time, the car insurance company provides you with a few extra days to pay the premium after the policy’s due date so that your car policy does not lapse.
The grace period for car insurance varies between 3 days to 1 month.
Mr. Rakesh’s car insurance policy has expired on the 10th of May 2021, according to the terms and conditions of Mr. Rakesh’s car insurance policy he has a grace period of 15 days before his car policy lapses, which means Mr. Rakesh will have to pay his premium latest by 25th of May 2021 to enjoy the continued benefit of his policy.
Insurance companies recognize that sometimes due to various reasons the insurer may fail to pay his life insurance policy premium on time. Hence, it provides extra days to pay the premium after the due date of the policy.
According to Insurance Regulatory and Development Authority (IRDA), the grace period for a term life insurance policy is 30 days.
In term life insurance, the grace period may differ according to the premium payment method. Usually, the grace period is 30 days if the premium is paid annually and 15 days if it is paid monthly.
If the insurer still does not pay his premium within the grace period, his policy will lapse. This will result in the lapse of all of his life insurance benefits. Hence the policyholder must pay his premium on time to avoid any distress.
Further, It is to be noted that the life insurance policy remains active during the grace period and if anything happens to the insured, the nominee will still be entitled to the benefits.