Do you know what happens when the policyholder dies within the grace period provided after the due date of paying the premium. The answer might surprise you because there is a big myth around this topic.
Every life insurance company provide a grace period of 30 days for paying the premium after the due date is over. Companies send reminders on sms and emails to make sure the customer pays their premiums on or before the due date, but if they forget to pay the premiums on time, still they get 30 days of grace period. If premium are not yet paid after the grace period, then the policy is considered to be LAPSED and no death benefits will be given if the death happens after the grace period.
Do you get sum assured if death happens during grace period ?
And the answer is YES . As per the rules, if the death of the policy holder occurs on the due date of the premium payment or during the grace period, still the policy is valid and the beneficiaries will get the sum assured, but after deducting the the unpaid premium for the current year. As a proof I am putting up a proof of what the website of Max New York Life Insurance says below. You can see the exact wordings below.
So if a person has taken a 1 crore term plan for a 30 yrs period with premium Rs 10,000 per year on 20th dec 2010 and imagine the policy has run for 3 yrs , and now its the 4th premium is to be paid on 20th dec 2014 . The grace period will be upto 20th Jan 2015 . Now if the premium was not paid and the death happens on 25th Dec 2014 , then its during the grace period. How much will be the sum assured paid to the customer family ?
It would be Sum Assured – all unpaid premiums for the current year
= 1 crore – 10,090
= 99.9 Lacs
There have been a lot of cases, where a person just discontinued his policy for some reason and they faced an accident and died. Internet is full of these kind of cases. A lot of times death happens during the grace period and because the family is not well educated on this aspect, they don’t know that they are still liable for a claim (we provide our clients family claim assitance service).
So make sure you do not forget to pay your premiums and make sure you do not wait for the reminders from the insurance company. You can set up your own reminders and be more alert and proactive on this.
Let us know if you knew about this information or not ?