What’s the deadline to revive my insurance?

I am a 61-year-old retired government employee. I had taken out an insurance policy and paid annual premiums for the first two years but skipped the last three due to unsettled retirement benefits. What is the deadline for reviving this policy?

—Name withheld on request

As per applicable Irdai regulations, if a policyholder fails to pay renewal premium before the end of grace period, the policy shall lapse and the policyholder will not be able to avail any of the benefits under the policy. However, the policyholder can revive the policy during revival period. You must contact the insurance company to determine if the policy is within the revival period.

Insurance companies generally provide a revival period of 2-5 years, during which policyholders can reinstate their lapsed policies by paying the due premiums and fulfilling any additional requirements. The duration of the revival period depends on the insurance product, terms, and conditions of the policy. You must ensure that the premiums are paid on time to avoid lapses and termination of the policy.

I have a family history of hypertension. Do I need to do a medical check-up before purchasing a term plan?

—Name withheld on request

Insurance is based on trust and transparency, and it is advisable that all information is shared by customers towards their life insurance policy. This enables a smooth claim process, which would be the most critical stage in a life insurance journey.

Term plans usually offer a higher sum assured for a nominal premium amount, and involve a higher risk for an insurer. Hence, most of these policies are medically underwritten. In your case, to assess the potential risk, you may be required to do a medical check-up subject to the underwriting policy of the life insurer.

I started an National Pension Scheme (NPS) account for my 55-year old mother three years ago. We now plan to withdraw the sum invested before its maturity. Are there any penalties for withdrawing funds from NPS before retirement age?

—Name withheld on request

As per the regulations of NPS, a subscriber can voluntarily exit from the scheme before attaining the age of 60 years, provided he/she has subscribed to NPS for at least a minimum period of five years.

If the accumulated pension wealth is equal to or less than ₹2.5 lakh, you can withdraw the entire amount. However, if the corpus is higher, you must use at least 80% of the accumulated pension wealth to purchase an annuity plan that provides for a monthly pension. The remaining 20% can be withdrawn as a lump sum.

A subscriber can withdraw funds from the scheme before retirement age only in specific circumstances, such as treatment of specified illness or death of the subscriber. If a subscriber withdraws funds from NPS before the age of 60, except in the aforementioned circumstances, they will have to bear a penalty of 1% of the total accumulated pension wealth, subject to a minimum penalty of ₹1,000. This penalty is in addition to the tax implications that may arise from premature withdrawals.

It is important to note that premature withdrawal of NPS corpus can result in a lower retirement corpus, as you will miss the benefits of compounding and long-term growth of investments.

Sameer Joshi is chief agency officer, Bajaj Allianz Life Insurance.