What happens if I don't pay my LIC premium?

Asked by: Prof. Orin Ryan  |  Last update: February 11, 2022
Score: 4.7/5 (46 votes)

Term: If you stop paying premiums, your coverage lapses. Permanent: If you have this type of policy, you will have the following choices: Cash out the policy. ... You may, however, have to pay taxes on some of the cash value if the sum exceeds what you have paid in premiums.

What happens if I dont pay my LIC premium?

For some reason, if you are unable to pay the premium due even within the grace period provided by the insurer, your policy will be terminated. ... In term insurance, failure to pay the premium before the due date results in the policy lapsing, which forfeits your insurance benefits and the premiums paid so far.

What happens if LIC premium is not paying after 3 years?

So if you have already paid 3 years' premium, not paying any future premiums will convert the policy into a paid-up policy. You won't get any money back in the year you turn it into a paid-up policy but will have to wait till the policy's original maturity.

Can I cancel my LIC policy?

A policyholder can surrender his/her policy only after the completion of 3 years, i.e. the policy has to have been in force for a period of 3 years, at least. The surrender value provided by LIC is essentially 30% of the premiums that have been paid so far.

Do I get money back if I cancel my life insurance?

Do I get my money back if I cancel my life insurance policy? You don't get money back after canceling term life insurance unless you cancel during the free look period or mid-billing cycle. You may receive some money from your cash value if you cancel a whole life policy, but any gains are taxed as income.

Surrender LIC policy Vs stop paying premium, which is best?

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What happens if I stop paying LIC premium after 1 year?

For single premium policies, the surrender value gets acquired after the first year itself. In case you haven't paid even 2 or 3 years' premium (as per the case above) and want to discontinue, the insurer will not pay you back anything and will not convert it into a paid-up policy either. The money is all but lost.

When can we surrender LIC policy?

The policy can be surrendered after it has been in force for at least 3 full years. The Guaranteed Surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.

Can I get my money back from LIC?

The LIC new money back policy can be surrendered only after it accrues cash value after payment of 3 years of premiums. If policyholders stop paying the premium, the policy ceases to exist. Nevertheless, if premiums have been paid for three years, a paid up value is accrued for a reduced sum assured.

How can I know my LIC policy no?

Contact Home Branch

While visiting the LIC branch, make sure to bring your PAN card and other ID cards. LIC officials validate the details of the policyholder. Once the verification has been completed, the LIC staff provides you the policy number.

How do I get my money back from lapsed policy?

If your policy has lapsed due to non-payment of premiums within the due date, the terms and conditions of the policy contract are rendered void, till you revive your policy. A lapsed policy has to be revived by payment of the accumulated premiums with interest as well as giving the health requirements as required.

What happens if a policy lapses?

A Lapsed Policy

If the insured does not pay the premium amount even during the grace period, the life insurance policy lapses. In this state, the insured will no longer enjoy coverage from the policy, and will also not be eligible for any death benefit.

Can we stop LIC policy in middle?

Under the guaranteed surrender value, the policyholder can surrender their policy only after the completion of 3 years which means that the premium has to be paid for a minimum period of 3 years. ... So, the later the policy surrendered, the higher will be the LIC surrender value.

How can I cancel LIC policy in one year?

How to Cancel Policy After 1 Year?
  1. Fill the NEFT and LIC forms respectively.
  2. Submit your original policy documents along with the photocopy of your PAN card.
  3. Write a handwritten letter to LIC stating why you wish to discontinue this policy. ...
  4. The refund amount applicable will be paid once your application is processed.

How do you calculate surrender value?

Surrender value factor increases with the number of years of the policy. Surrender value factor will get close to 100% of premiums paid when the policy nears maturity. Hence, the guaranteed surrender value is calculated as total premiums paid multiplied by the surrender value factor.

Can I surrender LIC policy online?

First keep in mind that as of now Surrendering LIC policy is not possible ONLINE. Also, you have to surrender the LIC policy at your servicing LIC branch ONLY. ... The reason for this is, your all policy documents like proposal forms, loan details and all other details will be available at servicing branch only.

How many days will it take to get LIC surrender?

This process usually takes 3 to 4 business days.

Can I surrender LIC policy in any branch?

The LIC policy can only be surrendered at the branch, where it's currently being served (i.e. Servicing Branch). So you need to change the policy servicing branch first, before surrendering it. This will add time for the surrender process.

Can I surrender my PLI policy?

Surrendering any policy is always a loss. Bonus on the reduced sum assured is paid only if the policy is surrendered after 5 years.

Can I renew my lapsed LIC policy?

The inclusion of revival of policy is a must to have as it provides an option to the insured person to renew the policy and continue with the coverage of the plan. ... The renewal of the lapsed policy can be done anytime within 5 years from the date of unpaid premium.

What is surrender policy?

Typically, a policy with three years of successful premiums paid acquires a surrender value. One can find out the surrender value of the policy on the online portal of the insurance company. ... This is known as surrender of the policy, wherein the surrender value of the policy is paid out to the policy holder.

What happens if I stop paying LIC premium after 4 years?

Life Insurance

Term: If you stop paying premiums, your coverage lapses. Permanent: If you have this type of policy, you will have the following choices: Cash out the policy. This means that you can stop paying the premium and collect the available cash savings.

How is late fee for LIC premium calculated?

How to Calculate the Late Payment Fee?
  1. LIC Policy Premium for 1 year (12 months) is Rs. 4,000.
  2. The premium for 3 months will be (4000/12)*3 = 1,000.
  3. The late premium fee will be charged: (9.5% of 1,000) = 95.
  4. The total revival premium amount to be paid is (4,000 + 95) = 4,095.

How much can you charge for a late fee?

What is a reasonable late payment fee? Business owners have the option to charge a flat rate or a monthly finance charge, usually a percentage of the overdue amount. Companies typically assess a 1% to 1.5% late fee.

How can I check my due premium of LIC?

You can check details of your LIC policy including details of the LIC premium payment online, accrued bonuses, group schemes, etc. by simply logging on to the official website of LIC India with your LIC login credentials.

What are the documents required for surrendering LIC policy?

Physical copy of LIC Policy Surrender Form No. 5074. Bank account information of the policyholder will be required. Proof of identification such as voter's ID, PAN, or driving license will be required when surrendering LIC policy.