LIC policy revival: Up to 30% late fee to be waived on lapsed policies
The public sector insurance behemoth LIC has launched a 'Special Revival Campaign' the focus of which is to allow policyholders revive their lapsed insurance policies. LIC is also offering concessions on late fees.
Kolkata: Lapsed policies are a common phenomenon with almost all insurance companies. However, for LIC -- a public sector behemoth with millions of policyholders many of whom are towards the bottom of the financial pyramid -- lapsed policies are very common. Now in order to enable the policyholders to revive lapsed policies, the PSU has launched a 'Special Revival Campaign' across the country. The campaign has been designed to run from August 18 to October 17, 2025.
To boost revival of lapsed policies, LIC is also offering concessions on late fees. The concessions will be up to 30% but will be capped at Rs 5,000. However, if the insurance plans are small, a complete waiver of ate fees can also be allowed.
The revival window
Policies can be revived within five years from the date of the first unpaid premium, say the rules. However, they have to meet the policy’s terms and conditions. The point to note is, those policies that are still within the time window to pay premiums are yet to be matured can be revived. There are another set of conditions, and that is, usual medical and health requirements have to be met and the authorities will not allow any concession in this respect.
"Policies must be kept in force to ensure full insurance benefits. Reviving an old policy not only restores insurance cover but also strengthens financial security for families,” LIC has mentioned in a press statement. There could be many policyholders who have defaulted out of compulsion and not be choice, perhaps due to financial stress. LIC wants to get their policies revived.
Why do policies lapse
While financial distress can certainly be one factor leading to lapsed policies, there are other contributing factors as well. These can be forgetfulness. It sometimes so happens that policyholders just forget to pay premiums. And once the payment is not made after the grace period, usually 15 days after the due date, the policy is treated as lapsed. Also changes in contact details -- phone number, email etc -- make it impossible for the insurance company to send reminders to the policyholder to pay premium on time.
Lapsed policies can be expensive
The biggest financial injury arising out of a lapsed policy is loss of financial protection. The immediate fallout: if the policyholder expires, no claim will be entertained if the policy lapses. In other words, it will mean a complete wastage of the amount of money paid as a premium already as well as the lack of coverage for which one would have budgeted for in such a condition.
In order to revive a lapsed policy, the entire outstanding premiums need to be paid, penal fees have to be paid as well. In certain instances, where the health conditions of the policyholder has changed significantly, declarations could be needed. If there is any other requirement, LIC will inform the policyholder.