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Late Payment Penalties
Despite choosing the best possible insurance policies, there are times when people encounter unexpected situations that make them falter on premium payments. This can further lead to a bigger trouble of policy lapse if one fails to pay the premium even within the grace period. However, the insurance companies offer a second chance to revive the policy through a payment of late fees, so that the policyholder doesn’t lose his money.
1 Crore Term Insurance @Rs.19/day***
To delay is to regret
You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
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Return of Premium (ROP) Option^
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17% Online Discount**
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Same Day Claim Processing#
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100% Claims guaranteed15
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0% GST on Premiums#^#
Please wait while we are calculating term insurance premium for 1 crore
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Why does an insurance company charge late fee?
Table of Contents
What is a late payment charge in life insurance?
A late payment charge is the penalty you need to pay to revive life insurance that has lapsed due to non-payment of premiums. The amount of this penalty varies across the insurance companies and is usually a significantly higher amount. Typically, it consists of all the outstanding premiums along with an applicable rate of interest added to the sum. One has to go through this ordeal to get his policy back in force so that he doesn’t lose the money already paid as premiums and the benefits and coverages offered by the policy. However, usually, a life insurance company allows the revival of a lapsed policy within the next five years only.
What happens if you delay paying the life insurance premium?
A life insurance premium payment has to be made on or within the due date, beyond which a grace period of up to a maximum of 30 days is available. If you don’t pay the premium within the grace period, even the policy gets lapsed with all claims turning invalid and all the benefits and coverages terminated. A late fee allows payment of the entire outstanding amount along with a penalty to revive the policy within a stipulated time frame.
How to avoid late fees and other penalties?
There is no other way to avoid late fees and other penalties in life insurance than paying the premiums on time. To do that that you can avail of the following steps:
- To ensure paying premiums on due dates, you can use the auto-debit option. This enables automatic deductions of the premium amounts from your registered bank account as per the premium payment schedule.
- Alternatively, set reminders for the premium due dates which can save you from missing them. Align the premium payment schedule with your online calendar for a smooth experience.
- An annual premium payment schedule can spare you from the fear of forgetting the monthly premium due dates.
- Stay alert for reminders from your insurance company about the approaching due date.
Take away
Late payment charges of course are a way to revive your lapsed policy even if you completely falter on your premium payment. However, you need to pay a considerably more price for that as well. So, it’s indeed wiser to pay the premium within the grace period offered by the insurer if you miss the original due date. Why go for a loss when you have a way out, right?
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
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Here's all you should know about life insurance.
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HDFC Life
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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
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@As per integrated annual report FY24-25, available on www.hdfclife.com. As of May 2025
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved
^ Available under Life & Life Plus plan options
***Online Premium for Life Option for HDFC Life Click 2 Protect Supreme(UIN:101N183V01), Male Life Assured, Non-Smoker, salaried, 20 years of age, Policy term of 25 years, Regular pay, Monthly frequency, inclusive of 15% online discount (applicable only for 1st year premium) & exclusive of taxes and levies as applicable. (Monthly Premium of 573/30=19).
**If a customer is a Salaried individual and has opted for a cover of INR 2 Cr with Limited pay, then the total discounts applicable shall be: 10% +7% = 17% discount on the first year premiums.
~Tax benefits of ₹ 54,600 (₹ 46,800 u/s 80C & ₹ 7,800 u/s 80D) is calculated at highest tax slab rate of 30% on life insurance premium u/s 80C of ₹ 1,50,000 and health premium (Critical illness rider) u/s 80D of ₹ 25,000. Tax benefits are subject to conditions under section 80C, 80D, 10(10D) as per Income Tax Act, 1961. Please consult your tax advisor for more information.
#^# Individual Life Insurance Policies issued on or subsequent to 22nd, September 2025, shall be exempt from GST under the provisions of the Goods and Services Tax, 2017.
15. HDFC Life Click 2 Protect Ultimate(UIN: 101N179V01) A Non-Linked, Non-Participating, Individual, Pure Risk Premium/Savings Life Insurance Plan. The policy must be in force on the date of death, with all premiums fully paid, except for the exclusion clauses mentioned in Part F of the policy document.
ARN - ED/08/23/4052
