Have a LIC policy and how to convert to paid up?

Hi,

The policy would be in paid up after premium payment of 3 yrs however all the benefits that would be accrued in the policy would be ceased and only surrender value would be applicable.

Hi Deepak,

What you have read is correct, in case of endowment and other traditional savings plans issued by LIC would be converted to reduced paid up policy after premium for 3 full years are paid. This would result in the sum assured and the maturity amount getting reduced. In case you have an adequate term life cover you can go for surrender of policy instead of just discontinuing the premium payment resulting in reduced paid up policy.

Hi Deepak,

It is important to know the concept of paid-up value first. As per IRDA "after premiums are paid for a certain defined period or beyond and if subsequent premiums are not paid, the sum assured is reduced to a proportionate sum, which bears the same ratio to the full sum assured as the number of premiums actually paid bears to the total number originally stipulated in the policy".

Paid up Value = (No. of Premiums Paid / No. of Premiums Payable) X Sum Assured + Bonus (if applicable).

You are right in your understanding, in most of the Conventional Life Insurance, after 3 years of premium payments, a policy becomes paid-up if the future premiums are not paid by the policyholder.

Thanks.