A 1Life long-term insurance policy lapses when the premiums due are not paid. This means that the policy is effectively cancelled, and the policy owner, beneficiary or principal member cannot claim any benefits on the policy. However, lapsed policies can sometimes be reinstated, which means you can continue to give your loved one’s financial protection if you are no longer around. And it is cheaper and easier to reinstate a 1Life policy than to take out a new one! Here’s what you need to know.
When does a 1Life insurance policy lapse?
The terms and conditions of long-term insurance policies often state that a policy lapses 30 days after a premium has not been paid. Insurers can enforce this, but at 1Life we give you more time, usually two months, to help you catch up on unpaid premiums before lapsing the policy. Typically, a 1Life insurance policy will lapse when three premiums have not been paid.
However, there are two instances where a policy may lapse sooner:
- If there have previously been unpaid premiums, the policy may lapse 30 days after one non-payment.
- If the premium is unpaid because the policy owner specifically stopped the debit order, the policy may lapse when the debit order is returned unpaid.
Claims will also be affected if premiums are not paid. If we don’t receive payment 30 days after the normal deduction date, a claim may be declined.
What happens when my premium is unpaid?
We will contact you via SMS to let you know the premium due has not been paid and offer alternative payment options such as SnapScan and Zapper, or we will resubmit the debit order.
If your premiums remain unpaid, we will lapse the policy and no claims on the policy will be paid.
Remember that you can contact us at any time to discuss reducing your premiums to make your insurance more affordable. Your options include:
- Reducing cover for three months. After three months the sum assured can be increased to the previous level with no penalties or underwriting.
- Reducing cover permanently. If you wish to increase your cover at a later date underwriting will apply.
Top tip: Find out more about what happens when a debit order bounces and the alternative payment options you can use.
Reinstating a policy
The good news is that many lapsed policies can be reinstated, which means they will be valid and in force, and valid claims will be paid.
Information you need to know if you are going to reinstate a policy:
- Recently lapsed policies can be reinstated, but policies that lapsed some time ago, for example 12 months, cannot be reinstated – a new policy will have to be taken out.
- Some or all of the premiums may have to be paid. We will let you know what we require when you contact us with a reinstatement request.
- The sum assured may change. A reinstated policy may have a different sum assured, for example if a premium is reduced to make it more affordable or an arrangement is made to reduce the sum assured rather than pay all of the outstanding premiums.
- New waiting periods may apply. Funeral policies have a six-month waiting period for death from natural causes. A reinstated funeral policy may have this waiting period, or a shorter waiting period, applied effective from the date of reinstatement. Life cover policies have a two-year suicide exclusion clause, this will apply from the date of reinstatement.
- You may be asked medical underwriting questions again.
- HIV tests may be required – we will let you know if you need an HIV test.
- Claims between the lapse date and reinstatement date may not be paid.
Although this seems like a long list of terms and conditions, the friendly consultants in our reinstatement team will assist you with any questions or concerns you might have. You should always speak to our team about reinstating your policy as it is, in most cases, cheaper, easier and faster to reinstate a policy than it is to take out a new one. You can contact our reinstatement team on 011 468 9485.
Check in with your insurer
Insurance is a safety net that can give your family financial assistance when the unexpected happens. Always try and look for ways to keep your insurance and existing cover, and talk to us or your adviser if you have a lapsed policy, need to make premiums more affordable or want to reinstate a policy