Section 14 in Insurance Regulatory and Development Authority of India (Unit Linked Insurance Products) Regulations, 2019
14. Discontinuance of Policy after the lock-in-Period.
(a)For other than Single Premium Policies:(i)Upon expiry of the grace period, in case of discontinuance of policy due to non-payment of premium after lock-in period, the policy shall be converted into a reduced paid up policy with the paid-up sum assured i.e. original sum assured multiplied by the total number of premiums paid to the original number of premiums payable as per the terms and conditions of the policy. The policy shall continue to be in reduced paid-up status without rider cover, if any. All charges as per terms and conditions of the policy may be deducted during the revival period. However, the mortality charges shall be deducted based on the reduced paid up sum assured only.(ii)On such discontinuance, Insurer shall communicate the status of the policy, within three months of the first unpaid premium, to the policyholder and provide the following options:(1)To revive the policy within the revival period of three years, or(2)Complete withdrawal of the policy.(iii)In case the policyholder opts for (1) of Regulation 14(a)(ii) under these Regulations above but does not revive the policy during the revival period, the fund value shall be paid to the policyholder at the end of the revival period.(iv)In case the policyholder does not exercise any option as set out above, the policy shall continue to be in reduced paid up status. At the end of the revival period the proceeds of the policy fund shall be paid to the policyholder and the policy shall terminate.(v)However, the policyholder has an option to surrender the policy anytime and proceeds of the policy fund shall be payable.(b)In case of Single Premium Policies, the policyholder has an option to surrender the policy any time. Upon receipt of request for surrender, the fund value as on date of surrender shall be payable.
