How to revive a lapsed LIC Policy? When the policy lapses due to non-payment of premium within the due date of the premium, it lapses. So is the case with a LIC Policy. Thus, when a policy lapses, it is very important to revive the same so that the continuity and the life insurance coverage of the policy is maintained. The act of reviving the plan is known as reinstatement or revival of the insurance policy.
Why is reinstatement or revival of a lapsed insurance policy important?
It is important to reinstate a lapsed policy because it is foolish in the modern age to stay uncovered. With such high risks and threats all around, everyone should have an insurance cover. Then, a lapsed policy should be reinstated as you have already invested in it and lapsing the policy means losing a lot of money. If you want to discontinue with a policy, surrender it but do not lapse it on purpose. If however it gets lapsed due to a genuine reason, you must reinstate it at the earliest. Getting a new policy would mean undergoing the scrutiny of a new underwriter and if you developed any new ailments or habits, or you are considerably older now, you will have to pay more for your new policy, something that could have been avoided if you reinstated the existing policy.
How can a lapsed policy be reinstated?
To reinstate a lapsed policy, you have to follow these simple steps:
- Inform the insurance company that you wish to reinstate the lapsed policy
- Make the due payments, along with the interest for the missed premiums
- If it has been over 6 months, you may be required to undergo fresh medical tests
- Sign the policy documents afresh and get the policy back in action
- Continue to pay the premiums on time thenceforth
Revival Schemes of LIC:
In an LIC policy, there are certain terms and conditions that the insurer can apply at the time of revival as well, just like a fresh policy. Thus, revival of a policy is freshly underwritten with medical underwriting as well physical underwriting.
In LIC of India, there are certain types of revival:
- Ordinary Revival: This is the simplest revival form where the revival is done within the first 6 months from the due date of the first unpaid premium where only the unpaid premium and the interest needs to be paid for the policy to be revived.
- Revival on non-medical basis: Certain policies can be revived without any requirement of fresh medicals even beyond 6 months from the due date of the first unpaid premium. The policy can be revived only on declaration of good health.
- Revival on medical basis: Under this revival scheme, fresh medicals are required but the same will depend on the policyholder’s age, the sum assured, etc.
- There are some Special Revival Schemes of LIC as well like:
- Special Revival Scheme
- Revival by installment
- Loan- cum- revival
- Survival Benefit- cum- revival
What happens if you do not reinstate the lapsed policy?
If the lapsed policy is not reinstated, then in all likelihood you will lose the money you paid and also lose the cover. However in some cases, the policy remains active in a paid up state even when it is lapsed, but the value of the policy reduces drastically. So in such cases, the policyholder will be entitled to a claim, but the sum assured would be much lower.