Revive Lapsed Insurance Policy, LIC Revival Camp: Life Corporation of India (LIC) recently has come up with a new Revival Campaign which can be used for the revival of the lapse policies. This type of revival provides concession in late fees as well as relaxation of medical checkups. Many people don’t have explicit knowledge of this campaign and have certain questions in their mind such as what is Lapsed Insurance Policy, What is Revival of Insurance Policy, How to revive an Insurance Policy which has lapsed and about LIC Revival Camp. In this article, we will cover some of these areas in order to provide the readers with a better understanding of lapse policies.
What is a Lapsed Insurance Policy?
When a policyholder is unable to or fails to pay his/her premium within the grace period, then his/her life insurance policy lapses. This type of policy is termed the lapsed policy. Lapsation of policy is considered to be dangerous because, in this case, the policyholder and his/her beneficiaries might not get any benefit for which they have started the life insurance cover.
When Does a Policy Lapse?
An insurance policy is considered lapsed when the policyholder fails to pay the premium within the grace period. The grace period is considered to be 30 days in case of annual, half-yearly and quarterly renewals and 15 days for monthly renewals.
How Can You Prevent The Policy From Getting Lapsed?
Some ways to prevent lapsation of an insurance policy are as follows:
- The policyholder must pay his/her premiums within the due date or the grace period.
- Never wait for a premium due notice because it is only given as a courtesy from the insurance company’s side. It is the duty of the policyholder to pay the premium before the due date without waiting for the notice.
- Never depend on a second person or an intermediate for submitting the cheque to the insurance company. They might forget to do so because it is not their responsibility. The policyholder must always make his/her own arrangements for paying the premium.
- If the policyholder has shifted and there is a change in the address, then he/she must inform the insurance company as soon as possible.
Can One Still Have The Rights To File a Claim on a Lapsed Policy?
Policies that are less than three years old but lapses, and if something happens to the policyholder after the lapsation of the insurance policy and a claim is filed to the insurance company; the insurer is not obliged to pay anything to the policyholder. The insurance company might agree to return the premium payments the policyholder had made in the past, but they will not approve the whole insurance amount if the insurance policy has already lapsed due to non-payment of premium. Returning the premium amount is totally upon the insurer’s decision.
If the policy is more than three years old, but lapses and something happens to the policyholder, then there is some chance that the policyholder might still get the benefits promised at the time of the insurance agreement. However, the policyholder will not get the full amount, but a small part of it as decided while signing the agreement.
What If a Policyholder is Facing A Cash Shortage and Can’t Pay The Premiums?
In this case, the policyholder must inform the insurance company about his/her issues regarding the premium payments and ask them to reduce the insurance amount; thus, the premium amount will also decrease automatically. Once the premium amount is not that huge, it will become easy for the policyholder to continue with the premium payments without any trouble.
Revive Lapsed Insurance Policy
As we all know, revival means getting something back to life; similarly, reviving a lapsed insurance policy means getting the insurance cover back. In order to revive a lapsed insurance policy, the policyholder is entitled to pay the outstanding premiums along with certain interest to the insurance company. The rate at which the policyholder will pay the interest depends on the insurer and its policies. If the policy has lapsed for more than six months, then the person whose life is insured has to go under medical tests one more.
Can an Insurance Policy Revive at Any Time?
One can revive the insurance policy at any time, but sometimes it depends on how many days have passed since the policy has lapsed. According to the insurance laws, if the policy was in force for at least three years, then the policyholder got up to two years to revive the lapsed insurance policy. Some insurers like LIC have special schemes using which one can revive his/her lapsed policy even after 5 years.
If the policyholder revives his/her lapsed insurance policy within six months, then the process might get simpler because he/she only need to pay the premium due and the interest for reviving the policy, but if the revival takes more than six months, then the process might get more complex as it involves penalty fees and interest might go up to 10% depending upon the insurer.
After Revival One’s Insurance Policy is Same?
If the policyholder had purchased the policy before 2013, when the new guidelines were issued, then the same policy will get renewed with the same terms and conditions. This is as per the contractual guidelines, which are governed by the regulator.
If the policyholder has purchased the policy after 2013, then the new premium and policy conditions of the revived lapsed insurance will depend on the periods during which the dues were not being paid, the policyholder’s age and the sum that can be revived with the policy. So if the policyholder’s age band has changed from the date his/her premium was due, then the insurer might increase the mortality rate.
LIC Revival Camp
Like always, Life Insurance Corporation of India, which holds most of the market share in the insurance industry, has come up with a new LIC Revival camp for all its customers. This campaign was started with the objective to reduce lapsation of policies and to renew the relationship with the old customers in order to increase the customer base. Under this campaign, policyholders can revive their lapsed policies with a concession in the late fee, and they also get some relaxation in different medical requirements. The different types of revival schemes that one can find under LIC are as follows:
- Ordinary Revival Scheme
- Special Revival Scheme
- Loan-cum Revival Scheme
- Survival Benefit cum Revival Scheme
- Revival by Installation Method