LIC IPO Impact: Lapsed Policies Allowed To Be Renewed With Minimum Late Fees

Ahead of its IPO, LIC is allowing people whose policies have lapsed to revive them, among other concessions.

Policy Revival

It said that policies which have lapsed during the premium paying term instead of completed policy term can be revived from February 7 till March 25.

Policies of specific eligible plans can be revived within five years from the date of the first unpaid premium, subject to certain terms and conditions.

With the current Covid situation, it is a good time for LIC policyholders to revive their policies, restore life cover and ensure financial security for their family.

Late Fee Concessions

It is also offering concessions in late fees for other than term assurance and high risk plans, depending on the total premiums paid.

Eligible health and micro insurance plans also qualify for this concession.

No concessions apply on medical requirements.

How It Works

The insurer is offering a 20% late fee concession of a maximum Rs 2000 for conventional and health policies with a total receivable premium of up to Rs 1 lakh.

A 30% concession is applicable for a premium amount of above Rs 3 lakh with a cap of Rs 3,000.

The insurer is offering a full concession in late fee for micro-insurance plans.

Largest Life Insurer In The World

LIC could become the second-largest listed insurance provider and the largest life insurer globally at a valuation of $272 billion.

It has the potential to reach that figure after its IPO if the current valuation multiples of listed insurers in India are any indicator.

Post IPO Valuation

The insurer’s embedded value is likely to be around Rs 5 lakh crore as reported by Reuters and CNBC-TV18.

The government may peg its valuation at roughly $203 billion- a valuation that is 3.05 times price-to-embedded value (P/EV).

Global Position

It will overtake global peers like China’s Ping An Insurance and China Life Insurance, Hong Kong-listed AIA Group and US-listed Metlife, which are valued at $57 billion to $149 billion.

Its value is chiefly based on its dominance in the Indian life insurance market (over 65% market share) and its overall growth potential in the space.