Understanding LIC Policy Lapse: What You Need to Know?

What is a Lapsed LIC Policy?

An LIC policy lapse occurs when the policyholder fails to pay the premiums within the grace period. Generally, LIC offers a grace period of 15 or 30 days, depending on the policy. The policy becomes lapsed if the premiums are not paid within this period. This means the insurance coverage will stop, and the policy's benefits are unavailable until revived. There are various reasons for an LIC policy lapse.

Reasons for Policy Lapse

Several factors can lead to a policy lapse, including:

• Financial Constraints: Difficulty managing finances can make it challenging to pay premiums regularly.

• Forgetfulness: Sometimes, policyholders simply forget to make payments.

• Change in Contact Details: Payment reminders might not reach the policyholder if LIC is not updated with new contact details.

• Lack of Awareness: Policyholders may be unaware of the premium payment schedule or the consequences of a missed payment.

What Happens When LIC Policy Lapses?

If an LIC policy lapses, your life cover and benefits stop, and you may lose any bonuses or savings earned. You can restart the policy by paying the pending premiums with interest and completing any medical requirements, but this must be done within a set time, usually two years. However, LIC may or may not approve the revival. If you don’t revive it in time, your policy and its benefits end permanently. As per the LIC policy lapse rules, here are the consequences of a lapsed policy in detail :

• Loss of Coverage: The primary consequence of a lapsed policy is the loss of insurance coverage. In the event of the policyholder's death or any claim, no benefits will be provided if the policy lapses.

• Loss of Benefits: If the policy lapses before the completion of the policy term, any accumulated benefits or bonuses might be forfeited, depending on the policy's terms.

• Revival Challenges: While LIC policies can be revived, the process might involve additional conditions and costs, and depending on how long the policy has been lapsed, it may not always be possible.

How To Revive a Lapsed LIC Policy?

Many people wonder what happens when an LIC policy lapses. When a policy lapses, the life cover and other associated benefits, such as bonuses or maturity value, are paused. However, this situation is not permanent. LIC allows policyholders to reactivate their policy through LIC lapsed policy revival. LIC allows policyholders to revive lapsed policies, but it must be done within a specific period, usually two years from the lapse date. The revival process typically involves:

• Payment of Overdue Premiums: All outstanding premiums must be paid.

• Payment of Interest: Interest on overdue premiums might be applicable.

• Submission of Health Declaration: If the policyholder's health has changed significantly since the policy lapsed, a health declaration might be required.

• Additional Documentation: LIC may require additional documents to process the revival.

How To Prevent Policy Lapse?

• Set Reminders: Use digital reminders or calendar alerts to keep track of premium payment due dates.

• Automatic Payments: Opt for automatic bank debits to ensure timely premium payments.

• Regular Updates: Keep LIC informed of any contact details or financial status changes.

• Periodic Review: Review your insurance needs and policy status regularly to avoid lapses.

Wrapping It Up:

A lapsed LIC policy can disrupt your financial planning and insurance coverage, but understanding the process and taking proactive steps can help you manage it effectively. By staying informed and vigilant, you can ensure that your policy remains active and continues to serve its intended purpose of providing financial security.

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