LIC Delayed Payment of Premiums (Late Payment Charges) and Policy Revival Options

[rmani84]

LIC Delayed Payment of Premiums (Late Payment Charges)

If the premiums are not paid within the grace period, the policy lapses. However the policy can be revived within the term of the policy subject to revival formalities being observed.

The policy can be revived by mere payment of premiums with interest within six months from the due date of first unpaid premium

Interest for Delayed Payment of LIC Premiums

Delayed Months	Late Fee for Re 1 /- premium
	6%	7.50%	9.50%
1	0.005	0.00625	0.00792
2	0.01	0.0125	0.01583
3	0.015	0.01875	0.02375
4	0.02	0.025	0.03167
5	0.025	0.03125	0.03958
6	0.03	0.0375	0.0475

Note:
For charging interest LIC considers,
(1) up-to nearly 45 days as one month
(2) From 45 days to 75 days, as two months and so on

[rmani84]

LIC Policy Revival Options

If the premium due is not paid within the grace period, the policy is lapsed. A lapsed policy can be revived anytime within 5 years from the date of the first unpaid premium.

There are 5 different schemes under which a policy can be revived.

(1) Ordinary Revival Scheme:
Under this scheme, all arrears of the unpaid premiums with interest have to be paid. Along with this, 'Declaration of Good Health (DGH)' in form no 680 and medical if needed is required.

(2) Special Revival Scheme:
If a person is not in a position to pay all arrears, then, he can choose this scheme. Under this scheme DOC (Date of Commencement) will be shifted so that policy is not lapsed just prior to the date of revival. Other requirements such as DGH, medical wherever necessary are required as in ordinary revival scheme.

Special revival is allowed under the following conditions
(a) Policy should not have acquired any surrender value (S.V)
(b) Revival should be within 3 years of lapse
(c) Is allowed only once in a policy term

(3) Revival by Installment Method
If policy cannot pay all arrears in one lump-sum or if the policy cannot be revived under special revival scheme, he can make use of the installment revival scheme.

In this scheme, on the date of revival he has to pay immediately,
(a) 6 monthly premiums, if mode is monthly
(b) 2 quarterly premiums, if mode is quarterly
(c) 1 half yearly premium, if mode is half yearly
(d) half of yearly premium, if mode is yearly

The balance of revival amount is paid in installments spread over the next 2 years along with normal premium amount. Other requirements as in ordinary revival scheme applies

(4) Loan cum Revival Scheme
If a policy acquires surrender value on the date of revival, the policy can be revived taking a policy loan. Loan amount will be calculated treating the premiums as paid up-to the date of revival. Short fall, if any in revival has to be paid by the policy holder. Excess if any, is paid to the policy holder.

(5) Survival Benefit cum Revival Scheme
The survival benefit (SB) which falls due in a money back policy can be used for revival of a policy, if date of revival is later than the date of SB.

If the SB amount is less, the short fall has to be paid by the policy holder. Excess SB if any, is paid to the policy holder.

[sumitagah]

Very informative.