The policy had lapsed when the policyholder died — is anything payable?

Check three things against the date of death: whether the death fell within the grace period, when the policy is treated as in force; whether the policy had acquired a surrender value, which turns on the premiums paid, in which case it can continue as a paid-up policy instead of lapsing; and whether it had been revived. IRDAI's rule that savings policies acquire a surrender value does not extend to pure protection policies, so read the policy's own lapse and paid-up clauses before concluding anything.

'Lapsed' on an insurer's letter is a conclusion. Whether it is right depends on dates and on the kind of policy, and both are on paper.

First: was the death inside the grace period?

For life policies, IRDAI's product regulations set the grace period at fifteen days where premiums are paid monthly and 30 days in all other cases. During the grace period the policy is treated as in force, and the risk cover continues without interruption as per its terms. LIC's claim page, for example, says that where death occurs more than three years after the date of risk or revival, the death claim is payable if premiums are paid up to date or the death occurs within the days of grace.^{[1, 2, 3]}

Count from the premium due date shown in the policy or on the last premium receipt, not from the date of a reminder.

Second: had the policy acquired a surrender value?

Under IRDAI's 2024 rules, individual non-linked savings policies acquire a surrender value; the rule does not extend to pure risk products or immediate annuities. When depends on what was paid. For a policy other than a single-premium one, the Insurance Products Regulations attach a guaranteed surrender value to premiums paid for at least two consecutive years. IRDAI's master circular adds that for a policy surrendered in its first year, the higher of the guaranteed or a special surrender value becomes payable once the first policy year is complete, provided one full year's premium was paid. Check your policy's surrender and paid-up clauses for when yours acquired one. A policy that has acquired a surrender value does not lapse when further premiums are not paid: the Insurance Products Regulations keep it in force to the extent of the paid-up sum assured, unless that paid-up sum assured is below a minimum the Regulations set. For a death claim, that paid-up sum assured is at least the sum assured on death scaled by the period for which premiums were paid, out of the full period over which they were originally payable.^{[2, 1]}

Unit-linked policies follow different rules: after the lock-in period, a policy discontinued for non-payment becomes a reduced paid-up policy under the Regulations, so read the policy's discontinuance clause. And the 2024 Regulations do not invalidate contracts made before they came into force, so for an older policy the lapse and paid-up terms in its own document are what count.^[1]

Third: had it been revived?

A lapsed policy can be revived within the period stated in the policy document. For products under the 2024 Regulations that is five consecutive complete years from the first unpaid premium for non-linked policies, and three consecutive complete years for linked ones. If the policy was revived before death it was in force, but revival restarts the three-year contestable period, so the policy can again be contested for three years from the revival date.^{[2, 1]}

Steps

1. 1

   Collect the dates.

   The due date of the first unpaid premium, the payment mode, any revival date, and the date of death.

2. 2

   Ask the insurer for the policy's status in writing.

   Ask what the status was on the date of death and whether the policy had any surrender or paid-up value.

3. 3

   If the answer is 'lapsed', ask which clause and which dates it used.

   Put that in a written complaint to the grievance officer; the insurer should resolve it within 14 days with reasons that refer to the policy terms.^[2]

4. 4

   Escalate if you disagree.

   If the insurer rejects your written complaint, replies unsatisfactorily or does not reply within one month of receiving it, you can go to the Insurance Ombudsman. The complaint must be made within one year of receiving the insurer's decision or, if it never replied, of the end of one month after you sent your complaint.^[4]

ClaimAssure is an independent private platform. It is not an insurer, IRDAI, Bima Bharosa or the Insurance Ombudsman, it never files anything on your behalf, and it cannot promise any outcome. What it does is read your documents and show you what they say.

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