What are the implications of overdue premium? Here's what expert says

A lapsed policy can be revived by paying the due premiums, revival fees and other charges
Do millennials need life insurance? I am just 25, and I have no dependants. I have a home loan worth Rs 50 lakh. My parents and I stay there. I plan to get married after seven years. My spouse, too, will not be financially dependent on me.

Every earning individual should have life insurance. 'Sabse Pehle life insurance' has never been more relevant. Term insurance acts as a financial safety net for your family. In case of an eventuality, it protects your loved ones. A term plan becomes even more critical for you since you have a liability of Rs 50 lakh in the form of an outstanding home loan. The premium you pay for a term plan of Rs 1 crore at the age of 25 will be much lesser than what you will pay seven years later. Moreover, your premium will remain unchanged for the entire policy duration. 

You also mentioned that you intend to get married after seven years. In such a scenario, it is safe to assume that your responsibilities will increase, even if your spouse is not dependent on you. There will be expenses which you will need to address over the long term, such as planning family vacations, children's education, a larger house, etc. You can purchase savings and investment plans which offer payouts at regular intervals to enable you to fulfil such financial needs. Further, a corpus can be built to fund your children's education through a wealth creation plan. In addition to meeting financial requirements, these plans also provide the added benefit of life cover. As a parent or a spouse, you can leave behind a legacy through your life insurance policy. 

I am 36 years old. I have permanent residency in a European Country. My spouse is of Balkan origin and I have life insurance there. In case something happens, she will get the money. My mother is in India. Can I buy life insurance here? And if something happens, can she get the money?  

Insurance providers do offer cover to individuals having PIO (Person of Indian Origin) or OCI (Overseas Citizen of India) status. You can include your mother as a nominee. And yes, the policy will be valid even if death occurs outside India.  

What are the implications of overdue premium? I lost my job recently due to Coronavirus-related issues.

As a practice, life insurance companies offer a certain amount of time after the due date to pay the premium, which is called the 'grace period'. This period is usually 15 days for the monthly premium mode and 30 days for the annual mode of payment and is governed by the relevant clause of the respective product's document filed and approved by the Insurance Regulatory and Development Authority of India. Paying premiums on time or within the grace period enables the policyholder to continue enjoying the benefits under the insurance policy. If the premium payment remains overdue even after the grace period, the policy lapses and usually the benefits of the policy are no longer available to the policyholder. 
A lapsed policy can be revived by paying the due premiums, revival fees and other charges as applicable within a stipulated time from the date of lapsation, depending upon the insurance plan and other applicable conditions. 

Due to the COVID-19 pandemic, IRDAI has permitted a further extension in the grace period by an additional 30 days for annual and 15 days for monthly mode life insurance policies, which are due for renewal in the months of March and April 2020. Policyholders can connect with their insurance providers regarding the grace period for their policies and the payment options available to ensure continuity of benefits under their policies.

The writer is MD & CEO, HDFC Life. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in

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