How to Calculate Late Fee for delayed LIC Premium Payment?

Life Insurance Corporation of India(LIC) provides a certain grace period to all its customers on their policy premium payments according to the mode of payment of the policy. A grace period of 30days (30 days if mode of payment is Yearly/Half-yearly/Quarterly and 15 days if the mode is monthly) grace period to make policy premium payment without paying any additional charges. But if you have crossed 30 days you need to pay policy late fee.

For policy revival/policy renewal payment, LIC of India considers delay of:

30 days to 1 month 14 days as one month.
1 month 15 days to 2 months 14 days as 2 months.
2 month 15 days to 3 months 14 days as 3 months. And so on.

For policies where mode of premium payment is monthly – a delay of just 15 days will considered as a delay of one month.

Late premium payment fee at the rate of 9.5% will be charged, subject to minimum of Rs. 5.

GST will be applicable on interest charged on delayed receipt of premium. Rate will be applicable according to the type of premium collected.

How to Calculate the Late Payment Fee?

Example – A policyholder has not paid last annual premium (since 12/11/2017) of his LIC policy. Now he wants to revive it on 29/02/2018.

Revival Date : 29/02/2018
Premiums not paid since : 12/11/2017
No of Installment Due : 1
Mode of Payment : Yearly
Unpaid Installment Premium : 4,000
Total Premium Due Amount : 4,000

In this example the delay is more than 3 months 14 days, so as per above the delay will be considered as a 3 months delay.

LIC Policy Premium for 1 year (12 months) is Rs. 4,000
The premium for 3 months will be (4000/12)*3 = 1,000
The late premium fee will be charged: (9.5% of 1,000) = 95
The total revival premium amount to be paid is (4,000 + 95) = 4,095

GST will be applicable on interest charged on delayed receipt of premium. Rate will be applicable according to the type of premium collected.