Policy Revival

Policy revival gave lapsed policyholders a second chance to restore their insurance cover and the accumulated benefits associated with their policy, avoiding the need to purchase a new policy — which would involve fresh medical underwriting, potentially higher premiums due to older age, and the forfeiture of any benefits that had vested during the original policy's in-force years.

The revival period — the window within which revival was permitted — varied by insurer and product but was typically two to five years from the date of the first unpaid premium. IRDAI's product regulations specified minimum revival period standards, and insurers were not permitted to offer revival terms less favourable than the regulatory minimum. Beyond the revival period, the policy was permanently lapsed and could not be revived; the only option at that point was surrender for whatever value remained.

The standard revival process required the policyholder to pay all outstanding premiums from the date of lapse to the date of revival, plus interest on those overdue premiums at a rate specified in the policy document — typically 8–10 percent per annum compounded on the outstanding amount. For policies that had lapsed for extended periods, the revival amount could be substantial, sometimes exceeding several years of annual premiums depending on the interest accrual.

Insurers also typically required a declaration of good health as part of the revival process. If the policyholder's health had deteriorated significantly since policy inception, the insurer had the option to revive the policy with certain exclusions, increase the premium to reflect higher mortality risk, or decline revival. This health re-evaluation was a critical risk management step for the insurer and meant that revival was not always guaranteed regardless of willingness to pay outstanding premiums.

Special revival campaigns were periodically announced by major insurers and encouraged by IRDAI, offering waiver of a portion of interest on overdue premiums or simplified underwriting to incentivise policyholders with lapsed policies to revive them. These campaigns acknowledged that lapsed policies represented a significant pool of potential in-force business and that revival was preferable to permanent lapse for both the insurer and the policyholder.