How can an insurance policy be revived after it lapses?

—Name withheld on request

Insurance companies provide a grace period of up to 30 days from the policy renewal date to pay the outstanding premium. Further, if the premium is not paid, the policy is considered to have lapsed.

However, lapsed policies can be revived. The policy can be revived by paying the previous premium and additional charges levied by the insurer.

Often, insurers come up with special plans or campaigns to revive lapsed policies. In such plans, they usually waive any penalties or additional charges.

You can also surrender the policy if you do not wish to pay the premium in future. By now, your policy would have acquired surrender value.

I am 35 years old and have recently bought a term insurance policy. I recently read an article which said that banks can’t claim your property – be it a car, home or personal loan – even if the insurance period is not over. I want to know if there is any way to ensure that banks cannot claim any amount received by my nominee in the event of my untimely death?

—Name withheld on request

Banks or lenders can be made beneficiary of the term plan, if you entrust them with the life insurance plan. The process of transferring one’s rights to another person or entity is called “assignment”.

Assignment is common for large loan amounts, where you, as a policyholder, hand over your life insurance policy to the bank(s). However, in the absence of an assignment, the bank can claim its right on the income only through the courts by attaching your assets to recover the loan.

For married woman, amount can be secured from financial creditors by purchasing a policy under Married Women Protection Act. The income from such policies will be entirely owned by the wife.

Abhishek Bondia is the Principal Officer and Managing Director of SecureNow.in.