Hyderabad: To provide some relief to policyholders in times of a pandemic, India’s largest insurance company Life Insurance Corporation of India (LIC) has launched a two-month window for its customers to revive lapsed insurance policies.
LIC will be running a Special Revival Campaign from 10 August 2020 to 9 October 2020 during which policies of specific eligible plans can be revived within 5 years from date of the first unpaid premium, subject to certain terms and conditions.
“Earlier LIC policyholders who bought their policies post-1 January 2014 could revive their non-linked policies within 5 years and unit-linked policies within 3 years of first unpaid premium. Now, due to COVID-19 when people are failing to pay the premium on time, LIC wants to make it easier for customers and improve its collections,” said Naval Goel, CEO and Founder of online insurance aggregator PolicyX.com.
If you are a policyholder, here’s a quick look at the process of reviving a lapsed insurance policy, especially under the current scheme.
When is a life insurance policy considered lapsed?
If the policyholder fails to pay the fixed premium periodically on the due date or within the allowed grace period, then the policy is considered lapsed and the insurance cover cease to exist.
What is a grace period for LIC policy?
If policy premium is not paid by the due date, certain grace period is given to allow payments with some late fees. But if the policyholder misses even the grace period, the policy lapses.
The grace period for LIC policies where the premium payment mode is monthly is 15 days from the due date, while it is 30 days for policies where the premium payment mode is quarterly, half-yearly or yearly.
Which policies are eligible for LIC’s Special Revival Scheme?
LIC said policies which are in lapsed condition during the premium paying term and have not completed policy term as on the date of revival are eligible to be revived in this campaign.
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However, they can be revived only if it has been less than five years from the date of the first unpaid premium, subject to certain terms and conditions.
How can policyholders revive lapsed policy?
A lapsed policy has to be revived by payment of the accumulated premiums with interest as well as giving the health requirements as required. There are various types of revival processes that a policyholder can choose – ordinary revival, special revival, revival by instalment, Loan-cum-revival etc -- depending on his/her ability to pay the pending amount in lump sum or in instalments.
What is the exact procedure?
To revive a lapsed policy, policyholders should contact their LIC agents or advisor. You can also download the revival form sourced from LIC’s official website. The form has to be filled and submitted to the LIC home branch office (where your policy was taken) along with the pending amount with late fee as cash/cheque.
What are the concessions being offered by LIC under the current revival scheme?
LIC said it is not offering any concessions in terms of medical requirements due to the ongoing pandemic. However, it is offering a late fee concession in the range of Rs 1,500-2,500 depending on total receivable premium. Notably, this concession will not be available for high-risk plans like term assurance, health insurance, multiple risk policies etc.
Why should you consider reviving a lapsed policy?
Policyholders should consider reviving old lapsed policies as buying new policies with the same benefits later may attract much larger premium as the policyholder grows in age. Also, buying new medical policies would demand fresh medical tests, which raises the chances of higher premiums if any medical condition is diagnosed, or even a complete rejection in case of any terminal illness.
(ETV Bharat Report)
