Learn the basics
Short explainers in plain words. This is general information, not advice, a quote or an offer. Your policy document and LIC's own pages decide what applies to you.
Grace period and lapse
The grace period is extra time to pay after the due date. For monthly premiums it is 15 days. For quarterly, half-yearly and yearly premiums it is 30 days. The policy stays in force during the grace period. There is none for single-premium policies, and some plans differ, so check your policy document.
If the premium is not paid by the end of the grace period, the policy lapses: the cover and the benefits stop.
Reviving a lapsed policy
A lapsed policy can be revived. You pay the unpaid premiums with interest or a late fee. LIC may ask for a health declaration or a medical check, and may accept the policy on its original terms, on changed terms, or decline. Revival takes effect only after LIC approves it and gives you a revival receipt.
How long you have to revive a policy differs by plan. Check your policy document, or ask the branch, before you let a policy lapse.
Surrendering a policy
Surrender means ending the policy early. It involves a penalty, and LIC advises against it.
Whether there is a surrender value, and how much, depends on your plan and the years of premium you have paid. The rules differ by plan, and LIC's policy document for your plan governs. Ask the branch, or ask me to go through the document with you, before you decide.
The free-look period
For a policy with a term of one year or more, you have 30 days from receiving the policy document to return it, whatever the reason.
The refund is the premium less the proportionate risk premium for the cover period, the cost of the medical examination and stamp duty. Under IRDAI's rule it is due within 7 days of your request.
The Benefit Illustration
The Benefit Illustration is LIC's official statement of a policy's benefits, given to you before you buy. You and the person selling the policy both sign it, and it forms part of the policy document.
For most plans (annuities excepted) it shows the guaranteed benefits and the non-guaranteed benefits at two assumed rates of return, 4% and 8% a year. These are illustrative rates, not forecasts or promises.
The calculators on this site are for planning. The Benefit Illustration is the only official figure.
Nomination
A nomination tells LIC who receives the money if the policyholder dies. You can name one or more nominees with their shares, and you can change the nomination at any time during the policy term. For a minor nominee, a person must be appointed to receive the money.
A spouse, parent or child named as nominee is described in the Insurance Act as beneficially entitled to the money. Disputes between legal heirs can still arise. Nomination changes are made at the servicing LIC branch.
Maturity and survival benefits
LIC aims to pay maturity claims on or before the due date. The branch usually sends an intimation about two months before. You send Form No. 3825 with the original policy document at least one month before the due date. Survival benefits use Form No. 5180, and some are paid directly, so check with the branch.
Section 45: the three-year rule
After three years from the date a policy was issued, started or revived (whichever is latest), a life policy cannot be challenged for wrong information in the proposal. Within the first three years, LIC must give written grounds before it repudiates a claim. LIC can still ask for proof of age.
This is about challenging a policy for wrong statements in the proposal. It does not mean a claim can never be rejected. It is general information, not legal advice.