A grace period in insurance is a specific period of time after the premium due date during which the policyholder can pay the premium without losing coverage. It ensures that your insurance policy does not lapse immediately if you miss the due date.
✅ Simple Definition
A grace period is an extra time allowed by the insurer to pay your premium after the due date, keeping the policy active.
✅ Key Points
- Duration:
- Usually 15–30 days for monthly or yearly premiums (varies by insurer and policy type).
- Coverage During Grace Period:
- For life insurance, death benefits are usually still payable if the premium is paid within the grace period.
- For health or motor insurance, coverage continues during the grace period.
- Late Payment Penalty:
- Some insurers may charge a small late fee or interest if the premium is paid after the due date.
- Policy Lapse:
- If the premium is not paid within the grace period, the policy lapses, and coverage ends.
- For life insurance, some policies allow revival of lapsed policies by paying overdue premiums and interest.
✅ Example
- Life insurance premium due: 1st December.
- Grace period: 30 days → You can pay by 31st December.
- Coverage remains active during this period.
- If not paid by 31st December, the policy lapses.
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