Grace period

Grace period of premium payment is given under the title ‘Payment of premium’, which is also part of conditions and privileges referred in the preamble of the policy. Premium is to be paid on the due date – this is the contractual position.  However many insurers, as part of their customer oriented attitude, allow some more period for payment of premium. During this period the policy does not lose any benefit. It does not lapse. Premium paid during the grace period does not attract late fee. Generally grace period of one month but not less than 30 days is allowed for payment of yearly, half-yearly and quarterly premiums     and 15 days for monthly premiums. If death occurs within this period and before the payment of premium then due, the policy is  valid and sum assured is paid after deduction of the said unpaid premium and also unpaid premium falling due before the next policy anniversary [you will recall that premiums are payable yearly and all other modes allowed are convenience given to the policyholder]. If the premium is not paid before the expiry of grace period, the policy lapses. Please remember that grace period may not be available on all Plans of insurers. There are Plans where grace period is not provided. In such cases if premium is not paid on due date the policy lapses. Grace period is to be calculated from the next day of due date [please refer LIC's Manual on Premium payment and Lapse procedure (Manual No.1 of Policy Services)].

Key words:

Payment of premium

Conditions and privileges

Grace period

Lapse