October 17, 2012

Difficulty of LIC policy revival

Today I am going to share with you what difficulty one of my relative faced during the revival of his LIC policy. Eventhough LIC is the number one Life Insurance provider in India but still few service oriented issues need to be upgrade.

Before proceeding I want to define what is lapsed policy. It is the policy towards which you not pay the agreed premium within stipulated period. Usually some grace period will be their for payment. But you default in paying even after grace period too then the policy is to be in lapsed condition. Lapsed policy mean breach of contract and loosing of the agreed benefits. Hence it is always important to make sure your life insurance should be live.

Now the real experience, my relative took the policy from the agent who is government servant and this agent have agency in his wife’s name. Being the small village and giving respect to the educated and government employee, he took the policy without looking at the issuing branch details and for how many years this agent will be in contact with him.

After few years of regular pay, due to few financial difficulties he stopped to pay the premium towards this policy. In the mean time this government employee cum agent transferred to other district. After 2 years my relative thought to revive it and went to nearest LIC branch.

Nearest LIC branch informed my relative that policy was lapsed and need to be revived and revival will be in the branch where policy was issued or document present. Now the real drama is, my relative not have agent’s contact details and if he actually thought to revive the policy he need to travel to 300 Kms. Finally with taking the branch address, he went to that issuing branch and revived his lapsed policy.

With such a huge penetration of LIC all over India and with such a high technological advance why not LIC upgrading it’s system and provide the customers to revive it with any nearest branch? It may be a simple case, but if something happens to my relative in the mean time of revival then his dependent may be loosing all the benefits. Is it the real motive of LIC? If not then why it is not upgrading it’s system to the major issues of service oriented difficulties?

For all customers of LIC-If you are LIC customer then always keep track of the premium paying schedule and pay regularly. Suppose you took the policy and issuing branch is easily not reachable then better to transfer all your documents to your nearest branch. Otherwise you may face such difficulties during lapsation or claim time.

 

6 Comments

  1. Sir,

    My son is 33 yrs old and wants to buy30 yrs / Rs 1.00 cr Term Plan. While some good private cos premium for the same is around Rs 16 K, the premium of LIC Term Policy is Rs38 K . Why so much of difference given that Claim reimbursement ratio is 98% for LIC & 94 – 96 % of private Cos. On enquiry, LIC officials say that Claim rejection of Private Cos is very high while LIC Term Claims are seldom rejected .. ? Very confusing… Why IRD or Insurance Council does not take note of this high rate of discrepancy ?

    Reply
    • SK Dube-Difference in premium is not at all connected to LIC’s claim acceptance. It is purely actuaries call and LIC”s business move, which we can’t question. However, LIC claim showing high not because they are settled all term insurance plans, but because they settled more low sum assured endowment plans. Because no one knows who settled how many term insurance, whether it is LIC or private insurer. Hence, it is completely false of what LIC officials told to you. If you feel LIC is costly, then you can think of HDFC, ICICI, SBI or MaxLife. There is no harm in buying insurance from private companies.

      Reply
  2. your suggestions are really valuable. Thank u . I have one question ,if premium can be paid from anywhere in world through on line then why not the loan taken from the same LIC? If this system can be upgraded then it becomes easier for any one staying away from the service branch.

    Reply
    • Raghavendra-Thanks for your comment. This is the drawback policy holder of LIC now facing. LIC yet to upgrade to such that all after sale service can be available anywhere. As LIC is like any other Govt organisation, that apathy towards quick updation is missing. Let us hope for the best 🙂

      Reply
  3. I had similar difficulties with PPF. After starting the account, I did not contribute for couple of years and I have also lost my passbook. There is no simple way to revive the account, it seems. I was asked to lodge an FIR with police. It was close to impossible to get Police to take a complaint on such a silly issue like loss of passbook. So I left the issue for now. Not sure what to do. Any suggestions?

    Reply
    • Chandra-Better to follow the procedure and get it re-activate if the contribution is huge and one more point is, you can open only one PPF account in your own name. Hence better to re-activate it. What you think?

      Reply

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