A life insurance policy offers continued financial security to you and your family, provided you, as a policyholder, pay the premium regularly. If the premium dues are left unpaid over a long period, the policy may lapse and you may lose all or part of its benefit. To offer some respite to life insurance policyholders, LIC recently launched a revival campaign to ensure benefits of the policy continue. The revival campaign encourages people to renew their policy by offering concessions on late fees. So, if you have a policy with LIC, then you can revive individual policies till October 22, 2021. Do note it is applicable for eligible plans subject to certain terms and conditions.
What is lapsed policy
A policy is said to have lapsed if the premium dues are not paid even after the grace period (30 days for yearly, half-yearly and quarterly premium payment and 15 days for monthly premium payment).
In case of death of the policyholder when a policy has lapsed, if the policy has acquired surrender value, then claims will be settled to that extent by the insurer. If not, the policy loses all its benefits and no claims would be settled.
Usually, insurers allow you to revive your life policies within five years along with a penalty. Note that the penalty will vary with each insurer. Usually, LIC charges 9.5 per cent per annum as late fee penalty on premium dues. So, under normal times, a policyholder will have to pay total premiums due plus the penalty (interest) amount to reinstate the policy benefits.
Your policy document will state whether your policy is eligible for revival if it has lapsed. Beyond five years, insurers may allow for policy revival on a case-to-case basis.
Which policies can be revived under LIC campaign
Under the special concession offer, LIC is offering the benefit of reviving lapsed policies for plans that are other than term assurance and high risk plans. This also depends on the total premium paid.
There are no special concessions on the health/medical requirements that you as a policyholder have to meet.
Eligible health and micro-insurance plans also qualify for the concession in late fees.
Under the special campaign, policies of specific eligible plans can be revived within 5 years from the date of first unpaid premium subject to certain terms and conditions.
Late fee discount
If the total receivable premium for the lapsed policy is up to Rs 1 lakh, then the late concession is Rs 2000.
For total receivable premium of Rs 1.01 lakh to Rs 3 lakh, the late fee concession is Rs 2500.
For total receivable premium of over Rs 3 lakh, maximum concession allowed is Rs 3,000.
How to revive policy
LIC policyholders can revive the policy with the insurer directly by paying the interest charges for late payment.
With LIC policies, you can contact the agents or visit the branch to complete the revival process.
Why such a campaign
According to LIC, the lapsed policy offer will help policyholders who could not pay premiums on time because of unavoidable circumstances.
This should be seen in the backdrop of the Covid-19 pandemic and its after-effects on public life and incomes.
A life insurance policy offers continued financial security to you and your family, provided you, as a policyholder, pay the premium regularly. If the premium dues are left unpaid over a long period, the policy may lapse and you may lose all or part of its benefit.