The Grace Period is the time provided to the customer over and above the exact due date to make the payment for the renewal premium without lapsing the insurance policy or reducing any of the policy benefits. So it is an extra time window given to the customer to make the premium payment just in case he forgets to make the payment in time or needs some more time to arrange for the funds.
- Though the premium is due on the specified date, premiums can be paid within the Grace Period
- The grace period is usually 15 days in case of monthly payment mode policies and 30 or 31 days in case of quarterly, half-yearly, or annual premium payment mode, varying from company to company
- The policy continues to remain in full force during the grace period without any of the benefits being reduced.
- If death occurs within the grace period, the full claim amount is paid, subject to deduction of the unpaid premium
Let us understand with an example.
Mohan had taken a life insurance policy on 25 January 2010 in a semi-annual mode. Thus his renewal premium was due on 25 July 2010. However, he was provided a Grace Period of 30 days within which he was required to make a payment for his policy. Thus he was supposed to pay by 24 August 2010, since July is a 31 days month.
Now, Mohan met with an accident on 17 August 2010 and expired on 21 August 2010 before he could pay his premium.
In this case, will his nominee get the Sum Assured? Yes, his claim will be admitted since Mohan died within the Grace Period and the Sum Assured less the Premium due will be paid out.
