A policy lapses if the premiums are not paid within the grace period allowed. However, a lapsed policy can be revived within 5 years from the date of first unpaid premium. There are five different schemes under which a policy can be revived. Under this scheme, all the arrears of unpaid premiums along with interest have to be paid.
Interest is calculated on the unpaid amount of premiums.
Rate of Interest depends on when the policy was commenced. Also, a 'Declaration of Good Health' in Form No. 680 and medical certificate, if necessary, is required for effecting revival. If a person is not in a position to pay all the arrears, then, he can choose this scheme. Under this scheme, the date of commencement of the policy is shifted so that the policy is lapsed just prior to the date of revival. This means that the date of commencement is advanced approximately by the period of lapse.