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What is the Grace Period of LIC Premium Payments?
- DetailsWritten by PolicyBazaar -
- Hits : 448 -
Updated date : 10 July 2019
If you are also the one who has missed the payment of LIC premium within the date due, then do not worry. This is because LIC provides a grace period for LIC premium payment during which you can pay the premium of your LIC policy without paying interest on it. Let us understand the grace period in detail:
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.
Facts Related to the Grace Period
Some of the facts related to the grace period of a LIC policy that you must know are:
- The Sum Assured Does Not Change Even If the Premium is Not Given on the Due Date: The grace period for LIC premium payment is essentially some extra time given to you in your premium payment mode. This is the reason, the sum assured does not change for your policy as you are not penalized for paying your premium during the grace period.
- The Grace Period Is Not Same For All the Policies: The grace period is not universal for all the LIC policies. It changes as per the premium payment mode is chosen by you. For a monthly premium payment mode, it is 15 days, whereas, for a yearly, half-yearly, or quarterly premium payment mode, it is 30 days. The insurance providers like LIC inform you before the due date of your premium payment and even when you enter into the grace period.
- There Can Be Some Deductions: In case of demise of the policyholder within the grace period before he/she has made the premium payment for the policy, the insurer deducts the value of the premium’s value from the death benefit. It is to be noted here that the value paid is not extra value as it has to be paid by the insured for keeping this policy in force.
- The Cancellations Do Not Have Grace Period: If you want to change your insurer, then it is suggested to not to cancel your previous insurance plan until the new policy comes completely in place. This is because; if some unfortunate situation occurs even after one day of the policy cancellation, then there will not be any compensation. The best way is to keep your old policy in a grace period for LIC premium payment until your new policy comes in force.
- The Claims Can Be Made During the Grace Period: You are eligible to get death benefit if it occurs in the grace period of your policy. Like in the regular case, the nominee of your policy has to provide all the relevant documents to get the death benefits.
Final Words: The grace period for LIC premium payment is a limited time and you must make the premium payment during this time as if the grace period passes, your policy lapses. To revive a lapsed policy you not only have to pay some extra fees as a penalty but also go through the entire process of policy renewal. So, it is better to pay the premiums of your LIC policy on time and at least within the grace period. Generally, the insurance providers give information about the premium payment date and grace period as well.
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