By IndiaHub 
According to LIC, “Policies can be revived within 5 years from the date of the first unpaid premium, subject to satisfying the policy terms and conditions. Policies which are in a lapsed condition during the premium paying term and have not yet completed the policy term are eligible for revival in this campaign”.
Say you bought a 10-year individual, non-market-linked LIC policy in December 2020, which had a 5-year premium-paying term. However, you could not pay annual premiums during the 3 years following 2021 for some reason, and hence, thought it to be a lost cause now. But under this campaign, you can revive this policy, because your policy has lapsed during the 5-year premium payment term, and has also not completed the 10-year policy term.
Read on to know how you can revive your lapsed LIC policy without having to pay heavy late fees under this campaign.
How to know if my LIC Policy has lapsed?
Your policy does not immediately lapse after you miss paying premiums. In case you have not paid the policy’s premium payment within the due date, insurers allow you to pay your outstanding premium within a specific window, before they start levying penal interest and late fees over and above the due premium.
This period is called the grace period. And in case you do not make the necessary payments during this grace period, your policy is termed as lapsed. As defined by IRDAI’s Master Circular on Protection of Policyholders’ Interests 2024, “Policy lapse is a situation where the insured can no longer avail the benefits and coverage provided under a policy.”
You can check whether or not your policy has lapsed by logging into your LIC customer account and clicking on policy status.
According to LIC, the grace period for policies with a monthly premium payment mode is 15 days from the due date. For policies where the premium is paid on a quarterly, half-yearly or yearly basis, the grace period is one month, but not less than 30 days.
What happens when a policy lapses?
When a policy lapses, the policyholder typically loses benefits and coverage associated with that policy. So, in case your family member has a life insurance which has lapsed, they may not be eligible to receive death benefits or maturity benefits, depending on their policy, once they pass away.
How much will I have to pay to revive my LIC policy?
The policy will be revived, i.e., brought back into effect, only when all arrears of premium, together with interest (compounding half-yearly) at a rate fixed by the corporation, are paid.
As per LIC’s Jeevan Utsav plan, an individual non-linked whole life insurance plan, “The rate of interest applicable for revival under this plan for every 12 months from 1st May to 30th April shall not exceed 10-year G-Sec Rate p.a., compounding half-yearly as at the last trading day of the previous financial year plus 3% or the yield earned on the Corporation’s Non-Linked Non-Participating fund plus 1%, whichever is higher. For the 12 months commencing from 10 1st May 2024 to 30th April 2025, the applicable interest rate shall be 9.50% p.a., compounding half-yearly. The basis for the determination of the interest rate for policy revival is subject to change”.
So, say you were to revive your 10-year, non-linked, individual plan, which has an annual premium of Rs 50,000 that you purchased in December 2020, but had not paid premiums since the start of 2022. To bring this policy back into effect today, here’s how much you’d have to pay:
Hence, to revive this policy during the normal course, you would have to pay Rs 24,554 in revival interest.
Will I have to pay premiums for these lapsed policies?
Yes. The revival interest will have to be paid over and above the due premium. Through this campaign, the concession will only be provided on late fees or revival interest payable, not on outstanding premiums.
Will I get a significant deduction in revival interest if I revive my lapsed LIC policy under this campaign?
No. Under this campaign, a concession of 30% is being offered in the late fee for all non-linked insurance plans, up to a maximum of Rs 5,000, if eligible for revival under the scheme. There is a 100% late fee concession to revive lapsed micro insurance plans, which are specifically designed to offer coverage to low-income families.
Source: LIC
If you revive this policy under this plan, you will get a maximum concession of Rs 4,000, since the due, receivable premium is around Rs 1,50,000. So, you’ll end up paying Rs 1,50,000 (due premium) plus Rs 20,554 (24,554 minus 4,000), which totals to Rs 1,70,554.
While there is a 30% concession fee available, which means you could have received a concession worth Rs 7,366, this would not be applicable since the maximum concession allowed in this category is Rs 4,000.
Also, there are no concessions on the medical or health requirements. This means that to revive your policy, LIC may ask you to submit extra medical tests and health reports. The costs of these tests will have to be borne by you.