When premium payments become difficult or are missed entirely, a life insurance policy goes through a predictable sequence of stages — each with different implications for your cover and your options. Understanding this sequence helps you act at the right moment to protect your policy.
Stage 1 — Grace Period (Days 1–30 after due date). IRDAI mandates a minimum 30-day grace period after every missed premium due date. During this window, the policy remains fully active. Cover continues. If a claim arises, it will be paid. The only requirement is that the overdue premium be paid before the grace period expires. No penalty, no paperwork — just pay.
Stage 2 — Lapse (After grace period, up to 2 years). Once the grace period passes without payment, the policy lapses. Cover stops immediately. No claims can be made during a lapsed period. For savings plans, a reduced paid-up value may remain — but for term plans, the policy simply becomes inactive.
Stage 3 — Revival Window (Up to 5 years post-lapse). Most policies can be revived within 2–5 years of lapsing, by paying all overdue premiums with interest (typically 8–9% per annum) and submitting a fresh health declaration. The earlier in this window you revive, the simpler the process. Late revival may require a new medical examination.
After the revival window closes, the policy cannot be revived and is permanently extinguished. For term plans, this means buying a new policy at an older age and potentially worse health — a significantly worse outcome than simple revival.