“It is the ruthless lapse rules governing life and health insurance policies. Today, most insurance policies, including those under LIC, provide a mere 30-day grace period for premium payment. A single list installment caused by sudden job loss, medical emergency, delayed salary, or temporary cash flow shortfall is enough to collapse an entire policy,” Rajya Sabha NCP-SCP member Fauzia Khan said
New Delhi:Rajya Sabha NCP-SCP member Fauzia Khan on Thursday urged the finance minister to direct insurance regulator IRDAI to ease stringent lapse rules in life and health policies by extending the grace period to 90 days from 30 days.
Raising the issue during Zero Hour in the House, she said a silent financial crisis is affecting crores of middle-class families across India.
“It is the ruthless lapse rules governing life and health insurance policies. Today, most insurance policies, including those under LIC, provide a mere 30-day grace period for premium payment. A single list installment caused by sudden job loss, medical emergency, delayed salary, or temporary cash flow shortfall is enough to collapse an entire policy,” Khan said.
She said policyholders pay premiums year after year trusting their families will be protected but the premiums already paid becomes worthless overnight.
Revival demands steep penalties, compounded interest, fresh medical examinations, and sometimes even fresh underwriting, and punishes people when they are most vulnerable, Khan.
She suggested three pro-consumer reforms — extend the grace period from 30 days to 90 days, introduce proportional late fees instead of policy forfeiture, and allow automatic revival within 180 days without fresh medical or underwriting.
“I urge the finance minister to direct Insurance Regulatory and Development Authority of India (IRDAI) to notify these reforms,” Khan said.
Emphasising that insurance was designed to stand beside families in distress, she said policyholders pay premiums year after year, trusting their families will be protected.