Grace Period of LIC Premium Payments

What is the Grace Period?

Basically, the products of Life Insurance are for the long term and the LIC of India provides two ways of premium payment for them. One is – upfront payment, which is called a single premium payment. Another is – annual payment, which is called as regular premium payment. As mentioned earlier, these policies are long term in nature; hence most of you purchase a regular premium payment plan. However, the regular premium payment policy as well comes in the variant of limited payment.

According to the limited premium payment version, you do not have to pay the premium throughout the policy term. In place of that, you do the payment of the premiums only for a limited number of years of the entire policy term.

As per regular premium payment policy, which is other than the annual premium payment, the insurance provider can allow the shorter installments of half-yearly, quarterly, or even monthly payments.

For annual premium payment, you have to pay the premiums on the date of renewal of the policy. The renewal date of a policy is exactly one year after the previous year’s premium payment date. However, in order to make the premium payments easier, the insurance company like LIC allows a grace period of 30 days for paying the renewal premium. But, if you have selected the mode of premium payment every month, then the grace period for LIC premium payment is 15 days. To understand this clearly, we are providing a detailed description in the following points:

• When the premium payment mode is half-yearly, yearly, or quarterly, then the grace period of 15 days is granted by the LIC of India.
• When the premium payment mode is monthly, then the grace period for LIC premium payment is 30 days.
• The policy lapses when the premium is not paid even within the mentioned grace period.
• If the grace period of your policy expires on some public holiday or on Sunday, then you may pay the premium on the following working day in order to keep your policy in force.
• If your policy is of age 3 years and you have not paid its subsequent premiums, then the policy will not become void instead, the sum assured is reduced to the amount that bears the same ratio to the original, as the premiums that you have paid (in numbers) to the total premiums (in number) that are payable.
• In the initial five years of the Unit Linked Insurance Plan (ULIP) or during the lock-in period of the ULIP, the grace period extends to seventy-five days after these 75 days the money is moved to some discounted fund. In the discounted fund, the money is kept until it is paid to the policyholder (you) after the completion of the lock-in period.