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What happens to your policy if you discontinue your premiums?
In case of a pure life insurance, if you discontinue your premiums, the policy lapses automatically and the risk cover stops.However, in traditional life insurance policy (investment-cum-protection policy), the original maturity amount is reduced by the insurance company.
You can follow these options in case of unpreventable situations:
- Surrender – The surrender value of the policy is attained only after you pay full premiums for 2 or 3 years, depending on the term of policy.
- Paid-up policy – If you discontinue your premiums, the policy automatically becomes paid-up. The maturity benefit, depending upon the number of premiums paid, will be paid at the end of policy term.
- Lapse – If you don’t pay for the minimum required years to attain surrender value, the policy will lapse and no benefits will be received.
- Revival – You can revive your policy provided you do it within a certain prescribed period.
