LIC penalty on insurance premium

What is the LIC Penalty for Late Payment of Premium?

So far as the LIC premium payment is concerned, it is always important to shell out the exact amount of premium within the given period of time. However, owing to unavoidable circumstances, many people somehow fail to clear the payment within the allotted period of time.

Therefore, it is important to be detailed about the penalty charges that come along with late premium payments.

According to the norm of the LIC, it is important to note, that the insurance company sends the premium notice one month in advance to the due of the month of the respective premium. Most importantly, it is always advised to shell out the premium in time, even if notices do not reach the concerned policyholder. It has been strictly mentioned that delayed transmission of premium notices may at times be unavoidable owing to any kind of postal delay.

Is there Any LIC Premium Payment Grace Period?

So far as the LIC premium payment is concerned, the LIC does offer a time period during which the concerned policyholder may still shell out the belated premium without attracting any amount of penalty. This time span is popularly known as the grace period.

  • The grace period for LIC insurance policies where the premium payment is monthly is fifteen days from the due date of premium payment.
  • The grace period for insurance policies where the premium payment is quarterly, half-yearly or yearly, is thirty days. The said amount of premium must be paid within one month to avoid penalty charges.

The aforementioned norms have been formulated in the provisions of the LIC. It is important to remember, so far as the LIC premium payment is concerned, that the concerned policyholder must not fail to disburse the payment within the grace period. The grace period is the final chance of clearing the payment without attracting penalty charges, according to the LIC insurance provisions.

What Must Be Done In Case of a LIC Policy Lapse?

It has already been mentioned that late payment of premium would attract penalty charges. So far as the LIC premium payment is concerned, late payment would inevitably result in a policy lapse, according to the LIC insurance provisions. Therefore, it is important to remember that a policy lapses if the premium is not disbursed even after the grace period.

So far as a lapsed insurance policy is concerned, it generally ceases to receive the due insurance coverage. However, it is important to note, that the concerned lapsed policy can be brought back by shelling out the amount of premium along with a particular rate of interest.

However, it is very important to note, if the concerned policy remains lapsed for a period of more than six months, it has to be compulsorily revived. So far as revival of a lapsed policy is concerned, one just needs to submit the Declaration of Good Health along with premium and interest.

It is important to remember that a lapsed policy would not be of any use to the concerned policyholder and his dear ones during the difficult times. Therefore, it is strictly advised to take care so that the insurance policies are always regularly and actively maintained.

You may also like to read: How to Check LIC Policy Status Without Registration?

How Can One Revive A LIC Lapsed Policy?

So far as the LIC online premium payment is concerned, it is important to note that the major points while reviving a lapsed insurance policy:

  • First and foremost, the concerned policyholder must fill the revival date, that is, the date on which he or she would like to revive the lapsed policy.
  • Secondly, it is important to mention the due date. The due date is the date of the first unpaid premium.
  • Thirdly, one has to correctly mention the premium paid for one installment of the concerned policy.
  • Lastly, a very important to thing to note is the mode of premium payment, which is, whether it is monthly, quarterly, half-yearly or yearly.

How to Calculate the Late Payment Fee?

In order to understand the process of calculation of the late fee, it would be best to consider a germane example.

A policyholder, say, has not shelled out the last annual premium (since 12/11/2015) of his LIC policy. Now, say, the policyholder wants to revive it on 29/02/2016. So:

Revival Date: 29/02/2016

Premiums not paid since 12/11/2015

No. of installments due: 1

Unpaid installment premium: 4000

Total premium due amount: 4000

So far as the above example is concerned, the delay, it can be seen, is more than 3 months and 14 days. Therefore, the said delay will be considered as a three-month delay. Therefore:

LIC policy premium for one year: 4000

The premium for three months will be (4000/12)*3 = 1000

The late premium fee will be charged: (9.5% of 1000) = 95

Total amount = 4000+95 = 4095.

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