What Is a Lapsed Policy? – Complete Guide
A lapsed policy is an insurance policy that becomes inactive due to non-payment of premiums within the grace period specified by the insurance company. Once a policy lapses, the policyholder loses insurance coverage and benefits until the policy is revived or a new policy is purchased.
Policy lapse is common in life insurance, health insurance, and other long-term insurance plans.
When Does an Insurance Policy Lapse?
An insurance policy lapses when:
- Premium is not paid on or before the due date
- Grace period (usually 15–30 days) expires
- No revival action is taken by the policyholder
After this, the insurer suspends coverage and benefits.
Common Reasons for Policy Lapse
- Forgetting premium due dates
- Financial difficulties
- Change in bank account or auto-debit failure
- Lack of awareness about policy importance
- Change in contact details without updating insurer
Impact of a Lapsed Insurance Policy
A lapsed policy can have serious consequences:
1. No Insurance Coverage
Claims are not payable during the lapsed period.
2. Loss of Benefits
Bonuses, riders, and accumulated benefits may stop.
3. Claim Rejection
Death or health claims are rejected if the policy is lapsed.
4. Financial Loss
Previously paid premiums may not be refunded.
Types of Insurance Policies That Can Lapse
- Life Insurance Policies
- Health Insurance Policies
- Child Plans & Retirement Plans
- Guaranteed & Investment Plans
Short-term policies like motor insurance lapse quickly if not renewed.
How to Revive a Lapsed Insurance Policy (Step-by-Step)
Step 1: Contact the Insurance Company
Check revival eligibility and time limit.
Step 2: Pay Pending Premiums
Pay all unpaid premiums with interest or penalty.
Step 3: Submit Revival Application
Fill revival or reinstatement form.
Step 4: Medical Examination (If Required)
Applicable if lapse period is long or sum insured is high.
Step 5: Policy Revival Confirmation
Once approved, policy benefits are restored.
Revival period usually ranges from 2 to 5 years, depending on the insurer and policy type.
Can a Lapsed Policy Be Claimed?
❌ No claim is payable if:
- The policy is not revived
- The claim event occurs during the lapsed period
✔ Claims are payable only after successful revival.
How to Avoid Policy Lapse
- Enable auto-debit or standing instructions
- Track premium due dates
- Keep contact details updated
- Choose suitable premium payment frequency
- Take professional guidance
Conclusion
A lapsed policy can put your financial security at serious risk. Timely premium payment and immediate revival action are crucial to ensure continuous insurance protection. Understanding lapse rules and revival options helps prevent claim rejection and financial loss.
At Saving Mantra, we help policyholders with policy revival, premium planning, and compliance support, ensuring uninterrupted insurance coverage.
Disclaimer
This blog is for informational purposes only and does not constitute legal, financial, or insurance advice. Policy lapse rules, revival conditions, and timelines may vary across insurers and are subject to IRDAI regulations. Readers are advised to consult their insurer or qualified insurance advisors for specific cases.