If a LIC policy holder fails to pay the LIC Premium before the due date, for the first time then the due date will becomes what is called an FUP (first unpaid premium).
In case of First unpaid premium or if the premium is not paid within the due date, there is still time for you to make the payment without payment of interest on the premium. This period is called the grace period.
There are many modes of payments like monthly quarterly, half-yearly or yearly, where you can schedule the payment. For monthly premium payment mode the grace period for payment of the premium is 15 days from the due date and for quarterly, half-yearly or yearly it is one month, but not less than 30 days.
If the days of grace period expire on a Sunday or a public holiday, the premium may be paid on the following working day.
What are the penalties for delayed LIC FUP?
If the premium is not paid within grace period also, then the policy holder has to pay the fine and it will be charged at the rate of 9.5%.
LIC considers the delay of 1 month 14 days as one month, while 1 month 15 days to 2 months 14 days is considered as 2 months.
A delay of just 15 days will also be considered as a delay of one month.
How to make sure there is LIC FUP?
It is extremely important to place reminders for LIC premium payment, before it becomes a first unpaid premium. This is not only for LIC payments, but, also a host of other obligations that you might have. It is important to give an ECS instruction, so the amount is deducted directly. Also, if possible make sure that you have an online mechanism for payment. this is because the LIC cheque may take time to clear and this should not be construed as a default. If possible ask the LIC agent from whom you took the LIC policy to remind you of payment.
Different insurance companies follow different mechanisms for payment and charges for delayed payment.