Due to the global financial repression many of us faulted the premium payments of the insurance policies and thus Insurance Plans went haywire. Investors lost significant amount of money because of lapsed Insurance Policies. But now there is good news for all of you whose LIC policies relapsed due to one reason or the other.
Life Insurance Corporation of India (LIC) is the state owned Insurance Company and oldest player in the field has launched revival schemes which will help you to pay the dues on the lapsed policies in installments and revive your policies. LIC and other players have revival schemes which will revive the lapsed policies within five years of the last payment. But, these schemes need the holder to pay the entire pending premium at one go along with interest. It is difficult for policy holders to pay the due premium in lump sum. Thus the need for the installment scheme and the special revival schemes arose (which were launched last month).
Studies show that over 9 million policies lapsed in 2009 and about half of the conventional policies that lapsed were sold by LIC (estimated). In absolute terms, nearly 7.3 million traditional policies sold by LIC worth Rs.52,926 crore had lapsed. LIC has 65% market share in Indian insurance and taking cue from them the private competitors could follow the revival schemes.
India Firstlife Insurance CEO P Nandagopal said that, “This scheme is a good initiative, since it will allow all customers to revive their policies on easy terms”. While his competitor Rajesh Sud, MD of Max New York Life Insurance, said “Revival of policies depends on the actual reasons behind a customer not paying his/her premiums”. (What he meant was if the policies were mis-sold to begin with it will make it impossible to retain the customer). “Also, one has to work out technicalities such as whether the policy was equitable and the subsidy is not happening at the cost of existing customers”.
Installment revival scheme like the regular revival scheme is applicable on the policies within 5 years of the last unpaid amount. But the special revival scheme is for where the last premium was paid not more than three years ago.
Declaration of good health and medical reports, wherever necessary, would have to be submitted.
The closing date of the revival schemes has not yet been decided.
If you stop paying premiums for five years at a stretch, you lose the entire amount paid up to that point. Thus, revival schemes will be most beneficial.
In January 2009, LIC had launched a revival scheme for policies that had lapsed for more than five years and it was open for merely 40 days and offered 20% less on the penal interest rate but the entire amount due has to be paid in one shot.
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