 "Have a lapsed LIC policy? Company offers discounts on fees to get you back")
Life Insurance Corporation of India (LIC) is running a campaign that allows policyholders to revive their lapsed insurance plans, seeking to retain business and customers.
Until October 17, individuals can revive eligible policies by paying pending premiums along with interest, but with a concession of up to 30 per cent on late fees. Late fees will be waived for micro-insurance plans aimed at low-income families.
Which policies qualify?
-The campaign is meant for individual and non-linked insurance policies.
-A lapsed policy can be revived within five years from the date of the first unpaid premium.
-The policy should still be within its overall term and premium-paying period. If someone bought a 10-year policy in 2020 with a five-year premium term but stopped paying in 2022, the plan can be revived as long as the overall term has not ended.
What is a lapsed policy?
A policy does not lapse the moment you miss a premium. Insurers allow a grace period of:
- 15 days for monthly payment mode
- 30 days (minimum) for quarterly, half-yearly, or annual modes
- If payment is not made even after this grace period, the policy is treated as lapsed. Once that happens, coverage and benefits such as death or maturity payouts are suspended until the plan is revived.
How to make payments
To revive a lapsed policy, the customer must clear:
- All unpaid premiums
- Revival interest, which LIC currently pegs at around 9.5 per cent per annum, compounded half-yearly
The campaign only provides a concession on the late fee/interest portion, not on the premiums themselves. For instance:
- For unpaid premiums worth Rs 1.5 lakh, the interest may come to around Rs 24,500.
- Under this scheme, a maximum concession of Rs 4,000 is allowed in this premium band.
- So, the revival cost falls from about Rs 1.74 lakh to Rs 1.70 lakh.
Points to keep in mind
- The maximum concession is capped between Rs 3,000 and Rs 5,000, depending on the premium.
- For micro-insurance, the late fee waiver is 100 per cent.
- LIC may still require fresh medical tests or health reports, and those costs must be borne by the policyholder.