How to revive lapsed LIC policy

The Life Insurance Corporation of India (LIC) has launched a drive to help policyholders revive lapsed insurance policies. Policies that have expired during the premium-paying term but have not yet completed the policy term are eligible to be revived as part of this campaign, which will run from February 7 to March 25, 2022, according to a press release issued by LIC.

"While the current Covid-19 pandemic scenario has emphasised the need for mortality protection, this campaign is a good opportunity for LIC's policyholders to revive their policies, restore life cover and ensure financial security for their family," the state-run insurer said in the release.

Policyholders with a lapsed LIC policy can apply for shares in the LIC’s initial public offering(IPO) through the policyholder Reservation Portion. According to the DRHP of LIC, “I am having a policy of the Corporation which is in lapsed condition. Am I eligible for reservation under the Policyholder Reservation Portion?

All policies which have not exited our records by way of maturity, surrender or by way of death of the policyholder are eligible for reservation under the Policyholder Reservation."

Also read: Can an LIC policyholder with lapsed policy apply for discounted IPO shares?

According to the release, policies of certain qualified plans can be revived under the campaign within five years of the initial unpaid premium, subject to particular criteria and limitations.

Here is a look at how one can revive lapsed policies.
LIC policy revival schemes
According to LIC website, "If the premium under a policy is not paid within the days of grace the policy lapses. Revival is a fresh contract wherein the insurer can impose fresh terms and conditions." A policy can be revived under the following types of revival:

Ordinary revival
If the policy is revived within 6 months of the due date of the first unpaid premium, no personal statement about health is necessary, and the policy is revived based on the collection of the late payment plus interest. The rate of interest that will be levied for such a late premium will be determined by the policy's start date.

Revival on non-medical basis
The amount to be revived for a non-medical policy should not exceed the authorised limit for non-medical assurance taken by the life assured.

Revival on medical basis
If an insurance policy cannot be revived under normal circumstances or on a non-medical basis, it can be revived under medical conditions. The amount to be revived will determine the medical requirements.

The other scehemes for revival are:
Special Revival Scheme
B. Revival by installment
C. Loan- cum- revival
D. Survival Benefit- cum- revival

Special Revival Scheme
Up to the date of revival, the policy shall not have been expired for less than 6 months or more than 3 years.

• This scheme can only be used to renew a policy once throughout the policy term.
• The maturity age must not exceed the original plan's set period.
• Revival requirements shall be governed by the standard terms and conditions in effect at the time.
• The difference between the old and new premiums, plus interest, will be recovered as of the resurrection date.
• The policyholder must submit a written request for the policy to be revived under the above system.
• In the case of a Money Back plan, insurance preparation fees and stamp fees must be paid by the customer.

Instalment Revival Scheme
According to the LIC website, revival under this scheme will be permitted:

• If the policyholder is unable to pay the premium arrears in one lump payment and the policy cannot be revived under the special revival program.
• If the premium arrears have been unpaid for more than a year.
• At the time of revival, the policy has no outstanding loans. During the revival's instalment-paying term, no survival benefit is due.
• The revival by instalment mechanism will be used for Children Deferred Assurance policies. After the deferment time, it is permissible.
• Policies issued under the Salary Savings Plan are not eligible for the Instalment Revival Scheme.

Loan cum Revival Scheme
A lapsed policy can be reactivated under this plan by recovering premium arrears from the amount available as a loan under the policy, according to the policy's terms. The following are the other Revival requirements:
a) If the loan amount is insufficient to cover premium arrears, the policyholder will be asked to pay the difference in the servicing branch.
b) If there is any balance after deducting the premium and interest, it is given to the life guaranteed.
c) Revival requirements will be as per the ordinary terms and conditions as they apply from time to time, and the policyholder will be required to submit the loan application and the policy document.

Survival Benefit cum Revival Scheme
Money back policies can be revived under regular revival if the amount of the policyholder's survival benefit is considered.
The following are the policy's requirements for renewal:
a) The policyholder must submit an S.B. discharge form with the policyholder's consent to revive the policy under this scheme, as per the usual terms and conditions as applicable from time to time along with the loan application.
b) The policyholder must submit an S.B. discharge form with the policyholder's consent to revive the policy under this scheme.
Policyholders can reactivate their policies directly with the insurer by paying the late payment interest.