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How to revive a lapsed LIC policy?

How to revive a lapsed LIC policy?

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 concession on late fees. So, if you have a policy with LIC, then you can revive your (individual) policies between August 10 and October 9, 2020. It is applicable for eligible plans subject to certain terms and conditions. Here is what you should know.

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 of time, the policy may lapse and you may lose all or part of its benefit. As part of its claim clearance offer, LIC is also encouraging policyholders to get their maturity amounts if they have missed making a claim on time.


Until premium dues are settled, with interest (penalty) chargeable by the insurer as a late fee (from the due date) along with the premium amount due, the policyholder will not receive the benefits of a life 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 a period of five years along with penalty. Note that the penalty will vary with each insurer. For instance, LIC charges 9.5 per cent per annum as late fee penalty on premium dues. HDFC Life, too, charges 9.5 per cent per annum as interest on premium outstanding. At the time of revival, policyholders 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.

In the case of LIC, in its recent revival campaign, you get to revive certain policies within five years from the date of the first unpaid premium (from the date you stopped paying premium). It is not applicable for high risk plans, including some term insurance, health insurance and multiple risk policies. High risks policies are those that, for instance, involve repayment of double/triple sum assured on maturity. LIC is offering late fee discounts to encourage policyholders to make the premium payment. If your total premium is up to Rs 1 lakh, then you get a late fee discount of 20 per cent (on late fees) with maximum concession amount limited to Rs 1,500. For premium amount between Rs 1 lakh and Rs 3 lakh, the late fee discount is 25 per cent (maximum concession is up to Rs 2,000) and for premium above Rs 3 lakh, the late fee discount is 30 per cent (concession capped at Rs 2,500).

How to revive

Policyholders can revive the policy with the insurer directly by paying the interest charges for late payment. Keep in mind that it is left to the discretion of the insurer to accept or reject the policy (although rejection is rare). Once the policy is revived, the benefits from the policies are also reinstated.

In the case of LIC policies, you can contact the agents or visit the branch to complete the revival process. It is more or less the same for other insurers as well. You can also call your insurer’s customer care to find out about revival procedures.

But, generally, it is better to keep the policy active by paying premium dues on time. Insurance companies usually send a premium reminder through mail or message or both.

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