Life Insurance Policy is basically a contract between insurance agent and the policy holder wherein the insured party is paid death benefit in case of policy holder’s death. But the insured person is supposed to pay a premium to avail of these opportunities.Particular events like sudden demise, accident or sickness are all supported by life insurance policies. But in many cases life insurance policy lapse which is not good for the insured person.
The main reasons why a policy lapses are:
(1)Many people are not able to pay premiums in time since they can’t afford it. This type of lapse requires that one applies for a new policy but it is not beneficial since one has to pay more premiums for the same policy. While buying a policy always read the terms and conditions and then apply for a flexible plan which allows one to even skip the premiums. If one wants the death benefits then one should make life insurance premium their priority.
(2) The main reason for the lapse of the policy is that people tend to forget to get policy renewed which is timely due to which one has to bear the adverse consequences of it .
(3) Once you have a past history of lapse means that it would affect your present lapse also since the agents think that one might leave the policy for better options. Many times its vice versa phenomena meaning that the insured person feels that he is imparting surplus money as compared to advantages so he lets his policy lapse and opts out for a better option.
These are the main reasons for the lapse of life insurance policy, but policy holder must always be careful of reimbursement of the same. In this case the insurance agent lets one convince about the lapse of the old policy and providing you with a new cover which would earn a good commission from your money.
