In a statement, LIC (Life Insurance Corporation of India) has said that it will allow its policyholders to revive policies that have lapsed for more than two years.
Five years is set as the time limit to revive a traditional non-linked policy as per the new rules and 3-years for unit-linked policies.
LIC provides a grace period of one month to its policyholders if they fail to pay a premium towards their policies within the due dates. If premiums are not paid within the grace period, the policy lapses.
Earlier, a lapsed policy could only be revived within a period of 2 consecutive years from the date of first unpaid premium but before the expiry of the policy term, by paying all the arrears of premium together with interest (compounding half-yearly) as per the rate set by the Corporation. This rule was applicable to all policies bought after 1 January 2014.
Those who had purchased policies before that could revive their non-linked policies within five years and unit-linked policies within three years from the date of the first unpaid premium.
The provision is now extended to policies bought after 2014 as well, after seeking IRDAI's permission.
On revival, which is allowed based on policy-specific conditions, a policyholder can continue with the life insurance cover and its benefits without the need to buy a new product.