What are the Late Payment Charges and Fee for LIC Premium?

LIC has been a trusted brand offering numerous insurance products and services, which cover people adequately irrespective of their economic background. Having an insurance plan from LIC is definitely recommended for all. However, it is also important to know the various requisites of the policies including the late LIC payment charges. Let us understand its importance in detail.

Why is it important to pay LIC premiums on time?

Paying an insurance premium on time is important because it guarantees the policyholder to continue receiving the financial coverage that the policy offers. If you fail to pay the premiums on time, your policy lapses and if that happens you cease to enjoy the benefits offered under your plan. Similar to buying an LIC premium, it is equally important to stay updated with the prerequisites of the policy including its various conditions. You must know that to keep your policy active and to stay away from LIC penalty for late payment, you must make the LIC policy payment timely.

What Is the Grace Period for LIC Policies? 

The grace period is the extra time given by LIC to policyholders if they are unable to make the premium payment on time. This is a 30-day time that starts from the end date of the premium payment during which the insured can pay off the overdue amount.

If a policyholder is paying a monthly premium, the grace period allowed is 15 days, whereas for annual premiums, a 30-day grace period is allowed.  Policyholders paying premiums during the grace period are not charged any extra fine or fee. But if the policyholder fails to pay off the amount during this time, LIC will impose a late fee to get the expired policy revived.

How to Calculate the Late Payment Fees for LIC Premiums?

To calculate the late fee for LIC premiums, you can use the LIC Premium Payment Calculator for Late Fees. The calculator considers some factors to evaluate the total late fee amount charged by LIC for delayed premium payments. Below are the details that you must submit:

• Revival date of the policy
• Date of the first unpaid premium
• Amount of premium
• Premium payment mode
• Total due (premium) to be paid
• Interest rate (current)

Based on the above details, the LIC calculator calculates the late payment fees.

Illustration of Late Fee Calculation with the Help of LIC Premium Payment Late Fee Calculator

Let’s take an example to understand the concept better. Let’s assume you have a LIC policy. You were supposed to make the premium payment for the policy in January 2022 but failed to do so due to some unavoidable reason. Now, in January 2023 you want to revive the plan. Here, consider the below details:

• The Premium payment mode is a monthly one
• The total monthly premium amount is INR 10,000
• The policy stand lapsed for 1 year
• The interest rate is 9.5%

Now,

• There are 13 pending instalments
• The total premium due is 13 multiplied by 10000, which is INR 1,30,000
• At 9.5%, the late premium fee is INR 6,175
• Thus, the total revival amount is INR 1,36,175

If you want to revive your expired LIC policy, you must look at the revival scheme in detail to make the process smooth. However, reviving an expired policy is still better and more cost-effective as compared to buying a new one. This is because a new policy will charge you higher premiums depending on various factors like age and health conditions. Also, you will have to go through the waiting periods like the initial and PED waiting periods if you buy a new plan. Hence, plan revival is a better option.

What are the LIC late payment charges for premiums?

Late LIC payment charges levied on a policy premium is calculated as per the time lapse between the expiry date and the subsequent months delayed in making the payments.

Below table will enhance your understanding further on LIC late payment charges:

LIC Late Fee Charges (Re 1/premium)	1st Month	2nd Month	3rd Month	4th Month	5th Month	6th Month
6%	0.005	0.001	0.015	0.02	0.025	0.03
7.50%	0.00625	0.0125	0.01875	0.025	0.03125	0.0375
9.50%	0.00792	0.01583	0.02375	0.03167	0.03958	0.0475

Terms and Conditions of LIC premium payment

Below are some conditions that are required to be noted regarding LIC premium payment:

• LIC of India sends reminder notices to policyholders for premium payment one month before the date.
• They also mention premium due dates and months on the policy document to help the policyholder in keeping track of the dates
• However, irrespective of the date of receiving the LIC notice, the premium has to be paid on time
• Also, despite reminders, if the policyholder fails to pay the premium on time, LIC allows a 15 days grace period (in case of monthly premiums) to make the payment without any fine amount
• In case of quarterly, semi-annual, or annual premium payment, the grace period is extended to 30 days

How to Revive a Lapsed Policy?

In case your LIC premium payment due date expires or you fail to make the timely payment even during the grace period and the policy lapses, you still have options of reviving the policy. There are various schemes as explained below that can be followed to revive a lapsed policy.

• Revival Scheme
• Special Revival Scheme
• Loan Cum Survival Scheme
• Survival Benefit Cum Revival Scheme

Let’s understand them in detail one by one.

# Ordinary Revival Scheme – Under this scheme, the policyholder is required to pay the arrears of all the unpaid premiums of his/her LIC policy in one single payment with interest. There are various terms and conditions that need to be considered while reviving your LIC policy via this scheme. You are also required to offer a good health declaration form along with a medical certificate if required

# Special Revival Scheme –   This scheme allows the Date of Commencement (DOC) of the policy to move in a way that the policy doesn’t lapse. So, you can make the payment within the revival period in one single premium. Other documents like medical certificates might also be required like in the above case. Further, you must note that:

• the revival should be done within 3 years of policy lapse
• this scheme is allowed only once during the term of a policy
• the policy shouldn’t have surrender value

# Survival Benefit Cum Revival Scheme – This scheme is used mainly to revive the money back policies. Here, the policyholder can use the survival benefit gained from the policy to revive it. However, this is possible if the date of receiving survival benefit is before the revival date. If the survival benefit amount is less as compared to premium due, the policyholder is expected to make the additional payment from his/her pocket. And if the survival benefit amount is more than the due payment, the extra amount is paid back to the policyholder.

# Loan Cum Survival Scheme – Under this scheme, if the customers of LIC policy have acquired a surrender value on the policy, he/she can take a loan against it to revive the lapsed policy. Thus, you can pay the premium arrears as a loan from the accumulated amount available.

How to pay your LIC premium to revive it?

There are two ways to make your LIC policy premium payment. They are online and offline.

1. Online payment methods include:

• Official LIC portal – Payment can be done by visiting the official LIC portal and using online banking facilities like debit or credit card, UPI, wallets etc.
• Authorized Banks – There are many authorized banks that accept LIC premium payments. Some of these banks are namely; Axis Bank, Union bank, IDBI bank etc.
• Merchant Mode – Merchant modes can also be used to make premium payments. Some of them include authorized agents known as Empowered Point, Retired LIC Employee collection points, LIC associates etc.
• Franchisees – Franchisees are also available to make payments such as Paytm, AP Online, InstaPay etc.

2. Offline payment methods include:

• NACH – NACH or National Automated Clearing House is a payment option that can be utilized by LIC policyholders to make payments. Under this payment mode, your bank deducts LIC premium at a pre-decided date, which is then remitted to LIC
• Bill Pay – Bill Pay or EBPP (Electronic Bill Presentment and Payment) is a process under which an LIC statement is sent to the policyholder electronically. The customer then pays the premium via several electronic mode of payments at his/her dispersal
• ATM – ATMs of Axis Bank and Corporation banks can also be used by LIC customers to make payments of premiums