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In term insurance, failure to pay the premium before the due date results in the policy lapsing, which forfeits your insurance benefits and the premiums paid so far. The policy is still in force during the grace period, and if anything happens to the insured, the nominee would still be eligible for the benefits.
If your policy has lapsed due to non-payment of premiums within the due date, the terms and conditions of the policy contract are rendered void, till you revive your policy. Always keep your policy in force to ensure that your family gets their financial protection assured by your policy.
How is late fee for LIC premium calculated?
How to Calculate the Late Payment Fee?
- LIC Policy Premium for 1 year (12 months) is Rs. 4,000.
- The premium for 3 months will be (4000/12)*3 = 1,000.
- The late premium fee will be charged: (9.5\% of 1,000) = 95.
- The total revival premium amount to be paid is (4,000 + 95) = 4,095.
What if LIC policy is lapsed?
An insurance policy is considered ‘lapsed’ if the premium is not paid within the grace period, which is 30 days in case of annual, half-yearly and quarterly renewals and 15 days for monthly renewals. To revive a lapsed policy, you need to pay the accumulated unpaid premiums along with the interest.
How can I cancel LIC policy in one year?
How To Surrender LIC Policy
- Original policy bond documents.
- Request for surrender value payment.
- LIC Surrender form- form 5074.
- LIC NEFT form.
- Bank account details.
- Original ID proof like Aadhar card, pan card or driving license.
- A cancelled cheque.
- Hand-written letter to LIC stating the reason to discontinue.
If you wish to discontinue your life insurance policy for any reason, you can do so, but at a cost. In case of a term life insurance policy, if you stop paying the periodic premium, the policy automatically lapses, i.e., the risk cover ceases but there is no other additional downside or cost.
How can I reopen my LIC policy?
Under the installment revival scheme, the policy can be revived by paying the amount in the following ways.
- In yearly premium mode, the policyholder needs to pay half of the yearly premium.
- In the half-yearly mode of premium payment, the policyholder needs to pay one-half of the yearly premium.
Can I stop LIC policy?
A policyholder can surrender his/her policy only after the completion of 3 years, i.e. the policy has to have been in force for a period of 3 years, at least. The surrender value provided by LIC is essentially 30\% of the premiums that have been paid so far.
If you had stopped paying your LIC policy premium, your policy will be lapsed with the end of the grace period. The grace period is the time provided by your insurer after the premium due date, to pay your pending premium with a late fee and the insurance coverage continues.
What is the meaning of lapsed LIC policy?
(a) to (d): Life Insurance Corporation of India (LIC) policies are considered as lapsed when the premium due under the policy is not paid within the grace period prescribed.
What happens if you don’t pay term insurance premiums?
In term insurance, failure to pay the premium before the due date results in the policy lapsing, which forfeits your insurance benefits and the premiums paid so far. In case of ULIP (unit-linked insurance plan), if you skip paying the premium in the first five years or during the lock-in period, the policy is considered lapsed.
What happens when the risk cover of an LIC policy expires?
The risk cover stops immediately after 6 months of last premium unpaid. No further bonus will be added to your policy account. However you are entitled to get the premium paid plus Bonus accrued at the time of maturity date. There are many schemes in LIC. It might get lapsed after 2 years and your risk cover will over.