A life insurance policy is a contract involving a long term relationship between the policy holder and the insurance company. Every life insurance policy guarantees the nominee, payment of an assured amount viz. Sum Assured, on the happening of the eventuality called death of the policy holder. Having a savings cum life insurance policy is not only beneficial in case of untimely death, but also to plan for long-term financial goals of the policy holder, such as early retirement, children’s education and marriage or a legacy one want to leave.
Renewal vs Revival
A life insurance policy comes into force when the customer pays the First Premium installment and the Receipt (FPR) is issued by LIC. As per the terms and conditions of the contract, for continuing the benefits such as life cover and rider benefits, a policy holder is supposed to pay the subsequent due premiums until claim. Failure to do so causes the policy to lapse after the grace period.
Renewal: If premium is paid within grace period it is called renewal. Various online and offline methods are available to pay the renewal premium, which we are going to discuss shortly.
Revival: If premium is not paid within grace period, policy lapses. However, policy can be revived on payment of all unpaid premiums along with interest thereon and satisfactory proof of good health subject to revival terms and conditions as applicable from time to time.
Policy can also be revived by
- raising loan under the policy – if it is eligible for loan OR
- adjusting survival benefit payable under the policy against revival amount.
How to pay Renewal Premium
Channels for payment of renewal premiums can be looked upon as
- Offline channels – where one needs to pay the premium upfront in the cash counter
- Online channels – where payments are accepted through internet, no physical presence is required