Definition of Lapse Policy along with Cause and Effect and Simulation. Have you ever submitted an insurance claim that was rejected because it is no longer active? This condition is known as policy lapse. As a customer, you can no longer get the benefits or protection of the insurance itself. When the risk of this policy lapse occurs, the full loss will be borne by the customer himself.
The insurance company is in no way obligated to cover all these losses. Because paying premiums on time is your obligation as an insurance policyholder. Here are various things you should understand about lapse policies that Klikasuransiku can summarize. Come on, see!
Definition and Causes of Lapse Policy
A lapsed policy is a termination of underwriting all benefits or protection from insurance obtained because premiums and other policy costs are due and cannot be paid immediately. The opposite of this lapse policy is referred to as an enforcer or active policy. The following are the causes of policy lapse in insurance customers. Among others are:
1. Payment of Premiums in Arrears
In conventional insurance provisions, if you are unable to pay the premium, then it is the same as not paying the cost of the insurance. So that the insurance contract will end automatically on the spot. However, it is different with unit link insurance.
Because in the first two years, you only have to pay the premium before the grace period, which ranges from 30 to 45 days, is over. However, if you have crossed the limit, your policy status will change to inactive.
2. Insufficient Investment Value
The investment value is not sufficient to pay all policy fees. In unit-linked insurance, if the insurance policy is two years old, all costs such as remaining acquisition costs, administrative costs, and insurance costs will be automatically deducted from the investment value.
It also does not see whether regular premium payments have been completed or not. Then if the value of your existing investment is not enough to pay all the costs of the policy, the insurance policy will automatically lapse.
The value of this investment also has an impact due to several things, such as frequent cash withdrawals, poor investment performance over a long time, and the insured party being unable to pay premiums regularly.
Lapse Policy Impact
Not only insurance benefits such as protection that can no longer be used, it turns out that this lapse policy status also has an impact on other things such as:
1. Must Pay Insurance Arrears Fees
If the unit-linked type of insurance policy has a policy lapse in the first two years, then to recover it you are also required to pay a premium with the number of months in arrears.
2. The Waiting Period Must Start From The Beginning
If the insurance policy has been recovered from its lapse condition, the insurance waiting period must be started again from the beginning like a new policy. For example, related the benefits of critical illness with a waiting period of 90 days. If you are diagnosed with an illness 90 days from the time the policy recovery has returned, of course, the claim will not get coverage. Surely we will feel harmed right?
3. Great Value Claims
If the claim you submitted in the first 2 years of insurance has a large enough coverage value such as critical illness or death. Of course, the insurance company must do a careful inspection. Then an investigation can also be carried out.
4. Can Be Subjected to a Health Check
Each insurance company has its policies and regulations regarding the method and technique of recovering the policy. In some companies, some can recover it only by paying premiums in arrears, but some have to fill out various health questions.
Especially when you are sick during the lapse period, a health check will likely be carried out again. Meanwhile, you have to pay for the medical check-up yourself.
5. Policy Recovery Disapproved
Based on the results of a medical check-up, if a serious health problem is found, it is likely that your policy will no longer be reinstated. Then if you want to recover it, you have to pay an extra premium first.
Lapse Policy Simulation
The following are things you must do after the insurance is declared no longer active:
1. Contact an Insurance Agent
Immediately contact your insurance agent and convey any complaints or other things that make the premiums in arrears and not paid. Usually, the insurance agent itself will ask about the length of payment of insurance premiums that are in arrears.
2. Follow the Rules Insurance company
As it is known that every company has a different recovery process related to insurance that has a policy lapse. Let’s say there is a company that insures you to do a health check.
So to make sure you have to ask the insurance agent. Usually, if the results of different examinations are found to be indicative of serious illness, then it is certain that your application for policy recovery is rejected.
3. Looking for another insurance company
If it can no longer be recovered due to health problems, then you should already have reserves to be able to reduce medical costs when you fall sick later. Then choose a company that has easy registration requirements.
That’s the explanation regarding the policy lapse. When you are unable to pay premiums, it does not mean that the outstanding payment obligations are also lost. You will lose even more if you don’t pay the premium on time. Therefore, try to pay premiums before maturity.
More Info : https://kapita.my.id/