grace period for payment
30 days after the payment due date .
Example payment due date is 26 january 2020.
(you can pay within 26 february 2020) make sure to pay before 3 business days to avoid transaction communication gap between lic and payment gateway*.
also you have options to pay 30 days before the payment due date. advanced payment also available.
policy lapse
premium not paid after grace period then policy will be lapse. (you
revival
within thin 3 years by paying unpaid premium + interest & medical report.
lic surrender value guaranteed
- before 3 years (if premium term more than 10 years (2 annual premiums if below 10 lakhs)
- after 3 years 30% of premiums paid – first year premium
- 4-7 years 50%
- 2-1 year before the maturity you get 90% of premiums paid no bonus.
ex
every year: 1 lakhs total 3 lakhs
30% 2 lakh = 60,000 (what about bonus / interest)
special surrender value (if bonuses)
sum assured, bonuses, policy term and premiums paid
Special Surrender Value will be 80% of the Maturity Sum Assured
incase you want close lic after 3 years
Special surrender value = (Paid-up value + bonus) x Surrender value factor*
*Surrender value factor is a percentage of paid-up value plus bonus.
Suppose you pay Rs. 30,000 premium annually, for a sum assured of Rs 6 lakhs and policy term being 20 years. Now, you stop paying after 4 years, the bonus accumulated so far is Rs. 60,000 and surrender value factor in 4th year is 30%:
The special surrender value = (30/100) *(6,00,000*(4/20) + 60,000) = Rs. 54,000
30/100>> factor
6 lakhs= sum,assured
4/20= paid /payable premiums
6000 = bonus
More the number of premiums paid, more is the surrender value.
Surrender value factor is a percentage of paid up value plus bonus. For the first three years, this factor is zero and keeps increasing from third year onwards
Paid Up value
If you stop paying premium after a specified period, your policy will continue but with lower sum assured. This reduced sum assured is called paid-up value or paid-up sum assured.
Paid up value = Original sum assured x(No. of premiums paid / No. of premiums payable)
ex: 50,000 annual premium (payment yearly paid for 3 years)
sum assured = 10 lakhs, term 20 years
paid up value = 10,00,000* (3/17)= 1,76,470 (actually you paid 3 lakhs)
incase guaranteed after 30% excluding 1st year premium (60,000 30% of 2 lakhs)
Paid-up value + bonus is the total paid-up value on maturity.
Tax on lic maturity
section 10 (10D)
premium not more than 10% of sum assured for a year.
generally traditional endowment plans may not attack but pension /annuities plans or onetime payment policies liable to pay tax on maturity.
we can claim up 1.5 lakh under section 80c for deductions.
not applicable for one time payment policies.
Cooling off / free look period:
once the policy purchased withing 15 days we cancel it.