Orphan Policy And How To Deal With It

Mumbai, November 4: Life insurance agents have played a major role in the growth of the industry and are the biggest link  between the insurers and the insured. Before the advent of communication technology, it was insurance agents who acted as our point of contact for information on policies and for buying insurance cover. Agents still continue to play a major role. However, your policy could become orphaned if your agent discontinues his agency or is terminated by the insurer. 

In such cases, the link between the insurer and insured breaks down leading to non-payment of premium and the policy becoming orphaned.

In simple words, orphan policy is an insurance policy that lapses due to failure to pay the premium even after six months from the due date. 

What to do in case of policy becoming orphan?

All is not lost if your policy becomes orphaned. An insured can bring a policy back into force by paying the pending premium along with late payment charges. 

You are not alone

We are highly dependent on agents for maintaining an insurance policy, however, as mentioned earlier, termination of the agent or discontinuation of his service could lead to lapsing of the policy. And to tackle such a scenario, the Insurance Regulatory and Development Authority of India has issued guidelines to assist policyholders. The guidelines include allotting orphaned policies to new agents from the side of life insurers. 

More and more cases of orphan policies are witnessed in cases where policyholders are completely dependent on the agents and more so in rural areas where agents continue to play the biggest role as the link between insurance companies and customers. To avoid any possibility of our policy becoming orphan in future, it’s important we take control of our own policy. Insurers have set up multiple channels (phone/email/website) to connect directly with the customers and one must take advantage of this routes for servicing of policies. One of the best methods to take control of our policy is to buy it online. This will help us keep track of the policy and pay the premium online on or before the due date, thus reducing the chances of lapsation.