NEW DELHI: If you are an LIC subscriber who has bought your insurance after 2014 and your policy has lapsed over two years ago due to non-payment, cheer. The company gives you one more chance to renew your lapsed policy.
According to LIC officials, the move will help them improve the persistency rate and help retain the state-run insurer’s old customer base, which it has been losing out to private players. “The policies that lapsed more than two years ago and were not earlier allowed to be revived, can be revived now,” LIC said in a statement.
According to the Insurance Regulatory and Development Authority of India’s (IRDAI) Product Regulation 2013, which came into effect from January 1, 2014, the revival period of a policy that was discontinued due to non-payment of premium was restricted to two consecutive years from the date of first the unpaid premium. The policyholder was entitled to revive the policy during this period, after which it lapses.
Earlier, all the policies taken after January 1, 2014, could not be revived if they remained in the lapsed condition for a period exceeding two years.
To extend the benefits of continued life cover for its customers, the LIC approached IRDAI and got the revival period extended for even those who bought policies post-January 1, 2014, the insurer said.
The persistency ratio broadly measures the quantum of customer retention by life insurance companies, while determining the percentage of policyholders paying renewal premiums at the end of one or more years, depending on the policy tenure.
Vipin Anand, managing director, LIC, said that unfortunately, there are circumstances when one is unable to continue paying premiums and the policy lapses, and it always makes better sense to revive an old policy rather than discontinuing it or buying a new one to restore one’s insurance cover.
“Buying life insurance is one of the most prudent decisions a person takes... We value each of our policyholders and their desire to continue their life insurance cover,” he said.
The norm
According to the Insurance Regulatory and Development Authority of India’s Product Regulation 2013, which came into effect from January 1, 2014, the revival period of a policy that was discontinued due to non-payment of premium was restricted to two consecutive years from the date of first the unpaid premium. The policyholder was entitled to revive the policy during this period, after which it lapses.