What is the grace period on a life insurance policy?

Answer 1

Typically 30 days. You will find that information in your life policy.

The grace period offered to us differs on the policy type and the premium payment frequency. Let us take 3 major categories of policies and analyze the available grace time.

1. ULIPs that are 3 years old or less

For ULIPs that have been in effect for three or less years and that have a regular premium paying system, the grace period offered by the companies is usually one month. Once this period is over the policy lapses. But, during the grace period the cover continues. So if a claim is made during the grace period, the nominee would get the benefits.

2. ULIPS that are more than 3 years old

ULIPs that have been in effect for more than 3 years, assume a paid up value since an investment corpus is already accumulated from the premiums paid in the previous years. This means that even if further premiums are not paid, the policy continues so long as the fund value covers the expenses that the insurance company incurs in managing your fund.

3. Traditional Insurance Plans

In case of traditional policies like term plans, money back plans or endowment plans etc the insurers give a grace period of about a month or upto a maximum of 3 months. The cover continues during this period. If the premium is not paid by the end of this period, the policy lapses and the life cover ceases.