Term Insurance Policy Lapse & Reinstatement: What You Should Know

2025-07-11

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We all know that term policy is about ensuring the financial security of our loved ones during unexpected situations, and to do so, we must maintain it, right? Well, what happens when life gets busy and you unintentionally miss a premium payment? When this happens, your policy could lapse, and will be no longer active.

Now, non-payment of premium for this first time does not immediately lead to that. When payment failure is beyond the grace period, there are consequences. However, the good news is that reinstatement is often possible, allowing you to restore your coverage with certain conditions. Today, let’s understand how term life policy lapses, its impact, and how it can be reinstated.

Key Takeaways

Missing a premium doesn’t immediately lapse your term life policy. You usually get a grace period of 15-30 days to make the payment.
If your policy lapses, you can reinstate it by paying missed premiums and, in some cases, submitting a health declaration.
The sooner you reinstate your policy, the easier it is. Delays may require medical tests or additional formalities.
A reinstated policy keeps your original premium and coverage, unlike a new one, which may have higher premiums and waiting periods.
Using auto-pay, financial planning, and tools like the term insurance plan calculator can help you avoid a policy lapse.Key Takeaways

What Happens When Your Term Life Policy Lapses?

The impact of a policy lapse depends on how long it has been inactive. Here's what typically happens:

Time Since Lapse	Impact on Policy
Within Grace Period (15-30 days)	No lapse; you can still pay the premium and keep coverage intact.
1-6 Months After Lapse	The policy is inactive, but you can reinstate it with minimal formalities.
Beyond 6 Months	Reinstatement may require medical tests and additional documents.

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Can You Reinstate a Lapsed Term Life Policy?

Yes! If your term life policy has lapsed, you can reinstate it by following a structured process. Here’s how:

Check the Grace Period: Most insurance providers offer a grace period of 15-30 days after the due date. If you pay within this period, your policy remains active without any extra requirements. At Canara HSBC Life Insurance, we offer a grace period of 30 days.
Understand the Reinstatement Window: Even after the grace period, you can still restore your policy. At Canara HSBC Life Insurance, we do support policy reinstatement within a specific period after lapse, but the sooner you act, the easier it is.
Pay Outstanding Premiums: To revive your policy, you will need to pay all missed premiums along with any late payment fees.
Submit a Health Declaration: Depending on how long the policy has been inactive, you might need to complete a health declaration form or undergo medical tests.
Approval and Policy Activation: Your policy will be reinstated once the insurer reviews your request, approves your documents, and processes the payment.

Did You Know?

The number of Indians with term insurance is low, ranging from 60 to 70 lakhs, and a majority of those policies do not provide sufficient coverage.

Source: The Hindu

Benefits of Reinstating Your Term Life Policy

If your term life policy lapses, reinstating it is often better than buying a new one. Here’s why:

Lower Premiums: A reinstated policy retains the original premium rates, whereas a new policy may have higher rates due to age or health changes.
No Fresh Waiting Periods: Many policies have waiting periods for specific benefits; reinstating avoids these delays.
Continued Coverage: You don’t risk gaps in protection, which could leave your family financially vulnerable.
Avoid Medical Reassessment: In some cases, reinstating requires fewer medical tests compared to a new policy application.

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How to Avoid Policy Lapse in the Future?

Preventing a policy lapse is always better than reinstating a lapsed one. Here’s how you can stay on track:

Use Auto-Pay: Set up automated payments to avoid missing due dates.
Opt for Longer Premium Payment Frequencies: Paying annually reduces the risk of missing multiple payments.
Keep an Emergency Fund: Having savings to cover premiums in tough times can prevent a lapse.
Use the Term Insurance Plan Calculator: Tools like the term insurance plan calculator available on the Canara HSBC Life Insurance website help you plan your premiums efficiently.

Calculate Term Insurance Premium

A term insurance calculator is a useful online tool that helps you determine how much coverage you need based on your income, lifestyle, and family’s needs.

My Income

My current Cover

Additional Details

Our Recommendation

My Income

My current Cover

Additional Details

Our Recommendation

I am {age} years old,

My Monthly income is {amount}

Additionally, I hold existing Insurance Cover of Rs {insurenceamount}

and loan amounting to Rs{amount}

My name is {name}

my mobile number is {contact}

50 Lakh

12.5 Lakh

75 Lakh

Zero

1 Crore

Where do you stand

Additional Life Cover

Hi {name}

To secure your family’s financial future and protect their dreams, you’ll need an additional cover of

rs 10,000

Note: This is a very brief calculation of HLV

Secure Now

Recalculate

Desclaimer-

The above calculation and illustration of figures are indicative only and not on actual basis.

Conclusion

A term life policy is a crucial financial tool that provides security for your loved ones. If your policy lapses, don’t panic because reinstatement is often an option. While acting quickly, understanding the reinstatement process, and using proactive measures are the key steps here, having a trusted insurance company by your side is also important.

At Canara HSBC Life Insurance, expect our complete support in times of need. We ensure our availability to assist to the best of our ability by being available all seven days of the week.

Enjoy a secure and supportive future with us!

Glossary

Grace Period: A 15-30 day window after the due date during which you can still pay your premium without policy lapse.
Policy Lapse: When a term life policy becomes inactive due to non-payment beyond the grace period.
Reinstatement: The process of restoring a lapsed term life policy by paying outstanding premiums and fulfilling insurer conditions.
Health Declaration: A form that insurers may require to confirm your health status before reinstating a lapsed policy.
Term Insurance Plan Calculator: A tool that helps estimate premium costs, ensuring better financial planning for term insurance.

FAQs

If you miss a premium payment, your policy enters a grace period (usually 15-30 days). After this, it may lapse, but reinstatement is possible within a specific period.

Yes, if reinstated within a short period, you may only need to submit a health declaration. However, a medical test may be required if the lapse is prolonged.

No, your premium remains the same as before the lapse. However, if you buy a new policy, the premium may be higher due to age or health changes.

Yes! Set up auto-payments, use the term insurance plan calculator to plan your finances, and ensure timely premium payments to keep your policy active.

Yes, if your policy is inactive due to non-payment, no claims can be made. It’s essential to reinstate the policy to restore its benefits and coverage.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.