The Life Insurance Corporation of India (LIC) has recently launched a campaign to revive old insurance policies that were closed before maturity. This campaign has begun from February 1 and is set to run up to March 24th, 2023, and offers incentives such as reduced late fees for those who sign up during this period.
In addition, policyholders who use the National Automated Clearing House (NACH) or BILL Pay can take advantage of a special discounted late fee of ₹5 (excluding GST).
What do you mean by policy lapse?
A policy lapse occurs when a policyholder is unable to avail of the benefits and cover provided under the policy due to non-payment of premiums within the designated time frame.
Many insurers offer a two-year revival period in which the insured can reinstate their policy by paying any accumulated premiums with interest and submitting proof of continued insurability to the satisfaction of the corporation.
Furthermore, they may also be required to pay a renewal fee along with a late fee and additional interests/penalties on the past two years' due premiums.
What’s different for LIC policyholders?
In the case of LIC policy, customers have some relaxation as the company policyholders who bought their policies post-January 1, 2014, can revive their non-linked policies within five years and unit-linked policies within three years of the first unpaid premium.
The available concessions are-
|Premium amount||Late fee concession||Maximum concession|
|Up to 1 lakh||25 percent||2500|
|1-3 lakh||25 percent||3000|
|More than 3 lakh||30 percent||3500|
During revival campaigns, customer can revive their policies even after two years with some conditions that vary from insurer to insurer and plan to plan. They may also waive the need for medical check-ups, and reduce the penalty charge or waive it completely.
With this campaign, LIC seeks to encourage its policyholders to reinstate their old policies and enjoy all the benefits that come with them. It is important to note that policy lapse affects not just the policyholder’s financial security but also their families. Therefore, LIC urges its policyholders to take advantage of this campaign and revive their lapsed policies.