Top 5 Banks Promising Returns Up To 7.25% On Fixed Deposits of 3 Years

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Investment

Vipul Das

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When it comes to a deposit safety of up to Rs 5 lakhs guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), as well as fixed rate of return, investing in bank fixed deposit plans is the best option for debt investors. Before applying for a fixed deposit, it is always recommended to hunt for the best or highest interest rates based on your deposit period. No doubt that you can invest in fixed deposits for short term as well as long term, but within the varying maturity period ranging from 7 days to 10 years, if you have a personal financial goal of 3 years or less than 3 years, then here the top 5 banks in India that are now providing an interest rate up to 7.25% on deposits amount of less than Rs 2 Cr maturing in less than 3 years or up to 3 years.

Note: The applicable interest rates on 3 years fixed deposits are marked in bold.

North East Small Finance Bank

North East Small Finance Bank

North East Small Finance Bank promises the highest return of 6.75 percent to the general public and 7.25 percent to senior persons for deposits of less than Rs 2 Cr maturing in 3 years or less than 3 years.

Period Regular FD Interest Rate In % (p.a.) Senior Citizen FD Interest Rate In % (p.a.)
7-14 Days 3 3.5
15-29 Days 3 3.5
30-45 Days 3 3.5
46-90 Days 3.5 4
91-180 Days 4 4.5
181-365 Days 5 5.5
366 days to 729 days 6.75 7.25
730 days to less than 1095 6.75 7.25
Source: Bank Website, Effective Date: 19th April 2021

Jana Small Finance Bank

Jana Small Finance Bank

For deposits maturing in 3 years or less than 3 years, Jana Small Finance Bank is promising a return of up to 6.50% to the general public and 7.00% returns to senior citizens. The interest rate on the fixed deposit of the bank was last revised on 07.05.2021 which is as follows:

Period Regular FD Interest Rate (p.a.) Senior Citizen FD Interest Rate (p.a.)
7-14 days 2.50% 3.00%
15-60 days 3.00% 3.50%
61-90 days 3.75% 4.25%
91-180 days 4.50% 5.00%
181-364 days 5.50% 6.00%
1 Year[365 Days] 6.25% 6.75%
> 1 Year – 2 Years 6.50% 7.00%
>2 Years-3 Years 6.50% 7.00%
Source: Bank Website, Effective Date: 07/05/2021

Ujjivan Small Finance Bank FD Rates

Ujjivan Small Finance Bank FD Rates

For a deposit amount of less than Rs 2 Cr, maturing in less than 3 years, Ujjivan Small Finance Bank is the second bank on our list promising the highest interest rates on 3-year fds.

Tenure Regular FD Interest Rate (p.a.) Senior Citizen FD Interest Rate (p.a.)
7 Days to 29 Days 2.90% 3.40%
30 Days to 89 Days 3.50% 4.00%
90 Days to 179 Days 4.25% 4.75%
180 Days to 364 Days 4.75% 5.25%
1 Year to 2 Years 6.00% 6.50%
2 Years and 1 Day to 3 years 6.50% 7.00%
Source: Bank Website, with effect from 16th August, 2021

Fincare Small Finance Bank

Fincare Small Finance Bank

Fincare Small Finance Bank is promising the following interest rates on deposits maturing in 3 years.

Tenure Regular FD Interest Rate (p.a.) Senior Citizen FD Interest Rate (p.a.)
7 days to 45 days 3% 3.50%
46 days to 90 days 3.25% 3.75%
91 days to 180 days 3.50% 4%
181 days to 364 days 5% 5.50%
12 months to 15 months 5.60% 6.10%
15 months 1 day to 18 months 5.60% 6.10%
18 months 1 day to 21 months 6% 6.50%
21 months 1 day to 24 months 6% 6.50%
24 months 1 day to 30 months 6.25% 6.75%
30 months 1 day to 36 months 6.25% 6.75%
Source: Bank Website, With effect from 29th July 2021

RBL Bank

RBL Bank

RBL Bank is currently offering the following interest rates to both regular and senior citizens on deposits of less than Rs 3 Cr maturing in less than 3 years.

Tenure Regular FD Interest Rate (p.a.) Senior Citizen FD Interest Rate (p.a.)
7 days to 14 days 3.25% 3.75%
15 days to 45 days 3.75% 4.25%
46 days to 90 days 4.00% 4.50%
91 days to 180 days 4.50% 5.00%
181 days to 240 days 5.00% 5.50%
241 days to 364 days 5.25% 5.75%
12 months to less than 24 months 6.00% 6.50%
24 months to less than 36 months 6.00% 6.50%
Source: Bank Website, w.e.f. September 01, 2021

Story first published: Sunday, October 10, 2021, 12:43 [IST]



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Forex reserves down by $1.169 billion to $637.477 billion, BFSI News, ET BFSI

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The country’s foreign exchange reserves dipped by USD 1.169 billion to stand at USD 637.477 billion in the week ended October 1, RBI data showed on Friday. In the previous week ended September 24, 2021, the reserves had declined by USD 997 million to USD 638.646 billion. The reserves had surged by USD 8.895 billion to a lifetime high of USD 642.453 billion in the week ended September 3, 2021.

During the reporting week ended October 1, 2021, the dip in the forex kitty was on account of a fall in the foreign currency assets (FCAs), a major component of the overall reserves.

FCAs declined by USD 1.28 billion to USD 575.451 billion, as per weekly data by the Reserve Bank of India (RBI).

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves were up by USD 128 million to USD 37.558 billion in the reporting week, the data showed.

The special drawing rights (SDRs) with the International Monetary Fund (IMF) declined by USD 138 million to USD 19.24 billion.

The country’s reserve position with the IMF increased by USD 122 million to USD 5.228 billion.

Also read:

“Real GDP in the current fiscal year is expected to grow by 8.3%, which is consistent with the last forecast from June 2021, and a 1.8 percentage point downward revision from the forecast in March 2021,” said the World Bank’s Fall 2021 economic update for South Asia.

“The sequential momentum in growth has slowed down or moderated a bit in the September quarter; it is likely to pick up in the December and the March quarter starting with the festive season spends.”



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Rupee Bank administrator seeks its merger with another lender, BFSI News, ET BFSI

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Rupee Co-operative Bank’s administrator Sudhir Pandit said on Saturday that he has requested the RBI authorities to merge the city-headquartered bank with another, stronger lender.

He had a meeting with Reserve Bank deputy governors Rajeshwar Rao and M P Jain in this regard, he said in a statement here.

“Liquidation is not the solution. Instead, we requested for the merger of the bank with another strong bank and protection of the interest of depositors with deposits of over Rs five lakh,” Pandit said.

Union Minister of State for Finance and Banking Bhagwant Karad “coordinated and navigated the meeting”, he said.

He apprised both the deputy governors about the efforts taken by the bank for “recovery and earning operating profit”, Pandit added.

“If the bank goes into liquidation, then those who have deposits of above Rs 5 lakh, most of them senior citizens, may lose almost sixty-five percent of their deposits,” he added.

Dr Karad assured him that he would pursue the matter, the administrator said.



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Is earnings yield a good valuation metric?

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Two friends caught up for a movie at a multiplex. They had lots to discuss as they came out after watching the movie.

Ram: I really liked the scene where the world was turned upside down and Topsy sung ’when you change the view from where you stood, the things you view will change for good.’ It reminded me of looking at the PE ratio upside down as some analysts do these days, although I don’t fully understand it.

Veena: Hey, that’s the earnings yield. It is 1/PE expressed as a percentage. For example, if the PE of a stock is 25 times, then it means its earnings yield is 1/25 = 4 per cent.

Ram: OK, I now get it! Why is it being used?

Veena: Expressing equity valuations in terms of earnings yield makes it easy to compare it as an asset class versus other alternatives you have such as real estate, bonds etc.

Ram: How? I don’t understand?

Veena: Well, when you want to buy a bond you look at bond yields, when you want to buy a real estate property for investment you look at rental yields, so similarly when you are looking at buying equities you must look at earnings yield to see how much your equity investment is going to yield. Amongst other factors, this will help you in understanding whether or not you are over paying for a stock based on fundamental valuation. Ultimately the valuation of any asset has to be based on what income it can generate, and evaluating it based on yields helps.

Ram: OK, so does it mean if the earnings yield is lower than bond yields then one must be cautious?

Veena: It depends. For example, growth stocks may have a low earnings yield as investors expect their earnings to be much higher in future years. However if an equity investment is yielding lower than risk-free government bonds – say the 10 year bond, you must be clear why you are buying a company stock which is yielding lower and be convinced about its growth prospects.

For example, in India, the 10-year government bond has a yield of around 6.2 per cent, while the benchmark Nifty 50 index based on its current price and expected earnings for FY21 has a lower earnings yield of around 4 per cent. On the other hand, in many developed countries such as the US, the UK and Japan, the earnings yield for benchmark index is higher than the government bond yield!

Ram: Interesting. Never realised…

Veena: By the way, there is one more interesting thing here. Investors usually look at the ROE (return on equity) as a metric when they buy shares, but fail to realise that looking at the ROE without considering the P/B (price/book value) may be misleading sometimes. ROE is earnings/book value; so if the ROE is high, but at the same time, the P/B is also high, it means the stock has already priced in the high returns on the book value. So..

Ram: I get it now! So, earnings yield helps cut through this by knocking off the book value component. That is ROE/(P/B) = earnings yield?

Veena: Bingo!

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Know the key points about new tax regime

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Getting ready to file your income tax return for the fiscal 2020-2021 (AY 21-22)? You must be aware that from this year onwards, there is an option to choose between the old tax regime and a newer one, which offers low tax rates but without the benefit of most deductions and exemptions.

There is no one size fits all solution to which regime will be more beneficial. The suitability for each individual is based on the exemptions and deductions that one is availing in the old tax regime.

Here are key points to note about the new tax regime before you make the choice.

Exemptions available

When opting for the new regime, needless to mention, one has to forego most of the deductions/exemptions including those under section 80C (maximum of ₹1.5 lakh) that can be claimed by investing in specified financial products, section 80D for health insurance premium paid, 80TTA for deduction on savings account interest earned from a bank; exemption for house rent allowance and leave travel allowance.

However, there are some categories still eligible for exemption under the new tax regime; subject to same conditions that have been applicable under the old tax regime.

The withdrawals from the long-term investment products- Employee Provident Fund (EPF) after five years, Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) and from National Pension Scheme (NPS) up to 60 per cent of the proceeds falls under exemption category in the new tax regime as well. Further, employer contribution to the NPS/EPF account which are exempt in the hands of employees in the old tax regime will get the same benefit even in the newer tax regime. Even the interest from EPF (up to 9.5 per cent), PPF and SSY continue to be exempted in the lower tax structure. Ditto with interest earned on savings account from post-office.

Similarly, gratuity received (after five years of service) and the amount received under Voluntary Retirement Scheme (VRS) from employer on termination -subject to conditions – will not attract tax under both the tax structures. Leave encashment too is eligible for same tax break, irrespective of the tax structure you choose.

Responding to tax queries related to perquisites from the employer to perform official duties under the new tax regime, the government has clarified that any amount received as reimbursement for the cost of travel, daily expenses on transfer, tour allowance for travel for official purposes and conveyance allowance for meeting conveyance expenditure incurred in course of performing official duties will be tax-exempt. It has also clarified that the food coupons received by an employee who has opted for the new tax regime will be taxable in her/his hands.

Further, maturity proceeds from life insurance policies come under the exempt category.

As mentioned, the conditions applicable for the said categories to be eligible for exemption in the old tax regime will be applicable under the new tax regime as well. For example, exemption on gratuity received, which is limited to least of – a) last salary*number of years of service*(15/26) b) ₹20 lakh and c) actual gratuity received – under the old tax regime, will still continue to be applicable for gratuity payments to those opting for the new tax regime.

 

When to choose

If you are a salaried employee, you would have already received a communication from your HR department in early FY21 asking your preferred tax regime for the year. But you can definitely change your mind after that. The intimation given to the HR is only for the TDS purposes. Anybody – salaried or unsalaried – can opt for whatever tax structure they wish to while filing the return for FY21, which is due this year by December 31.

If you decide to go for the new tax regime and have income from business or profession, you also need to file Form 10IE – that requires digital signature or e-verification through the income tax portal, before filing your income tax return . If you don’t, the income will be taxable as if the new regime was not selected.

Option to switch

If you don’t have income from business or profession, you can choose a suitable regime every year. Resultantly, you can switch from one tax regime to another based on your income levels and the eligible exemptions and deductions.

For those having income from business or profession, the option of new tax regime, once selected will be applicable to the subsequent assessment years as well. But if he/she wants to withdraw from the scheme, they can do so only once. Thereafter, the person will never be eligible to exercise the new tax regime option until he/she ceases to have income from business or profession.

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Tax Query: For income tax filing what is the reference document for forex conversion to rupee?

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On conversion from foreign currency to Indian rupee for income tax filing purposes, what is the reference document recognised by income tax rules? What is the date for applying the exchange rate?

Kindly answer as applicable to include rupee exchange rates for currencies outside the standard five – (US, UK, Canada, Japan and Australia) for example, BRICS countries.

Srishyla Melkote V

Rule 115 of the Income-tax Rules, 1962 provides for the rate of exchange that should be used for conversion of any foreign income accruing/ arising to an assessee.

As per the said rules, Telegraphic Transfer Buying Rate (‘TTBR’) of the relevant currency as adopted by State Bank of India on the specified date. For this purpose, ‘specified date’ means as below:

The SBI TTBR is available on a daily basis on the official site of the bank. However, please note that for historical rates, the same needs to be obtained from SBI by making a special application.

The writer is a practising chartered accountant

Send your queries to taxtalk@thehindu.co.in

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All about setting up a living trust

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We often take our ability to make decisions and execute them for granted. Only when one stumbles upon a situation such as the Covid pandemic – where one is not in control of one’s life and is unable to take simple yet critical actions such as payment of hospital bills – one realises the importance of incapacitation planning.

Besides, in the last couple of years India, has witnessed multifold increase in mental illness cases. The pandemic has worsened this issue further. While in the recent past we have seen some encouraging legislative changes to support a medical directive in case of a mental incapacitation, it has a limited purpose and flexibility. A living trust is a simple yet very effective structure in incapacitation planning, whatever be the trigger for the incapacitation.

How it works

In a living trust, one places her own assets into a private trust, which is fully controlled by the creator of the trust. The assets of this trust are also for an exclusive use of a settlor or creator of the trust during her lifetime.

During the able days of the settlor, she/he takes all decisions related to this trust such as buying assets, selling, redeeming or switching them, paying for expenses or merely withdrawing funds from the trust.

Settlor can freely move funds from the trust to herself since this does not involve any incidental cost such as tax or stamp duty in case of movable assets. In case of immovable assets, however, one needs to be aware of the potential stamp duty implication. The most common form of a living trust is a revocable one, in which case the settlor need not even worry about the tax incidence as the income of the trust is clubbed back in the hands of the settlor. To that extent, one can say that it is a tax neutral structure.

Operationally, it is important that the settlor names co-trustees at the time of the trust formation itself. However, they would have very little role to play until the time the settlor is able to manage her own affairs. Only when the settlor becomes incapacitated the co-trustees take over the trust assets and administer them as per the guidelines provided by the settlor in the trust deed.

Role of co-trustees

Since the co-trustees would have been already registered as a signatory on a bank, demat account, mutual fund or any other investment related institution, they can seamlessly manage the trust assets without any delay or need to involve an external agency such as a court order which is typically required to take legal guardianship.

If the settlor recovers from the illness, she will regain the control of the trust’s assets. In case of the demise of a settlor, the co-trustees will distribute the trust assets to a person named in the trust deed by the settlor as a beneficiary.

Since there is no need to obtain a probate for living trust, there will not be delay in such distribution. Unlike a will, a living trust cannot be contested by the beneficiaries over the distribution of assets. To that extent, the settlor can plan a harmonious distribution of her estate.

If the settlor has so instructed in the trust deed, then the trust can continue for the benefit of such successor beneficiaries even after the demise of the settlor. If the successor beneficiaries are dependent, the same living trust which is converted as an irrevocable one, can be used by the settlor to plan for wealth succession.

In this case the co trustees will manage the trust assets and distribute the income to the beneficiaries as directed by the settlor and at a predefined incidence will hand over a trust property to the beneficiaries and dissolve the trust.

Living trust is one of the most flexible, effective and cost efficient structures in succession as well as incapacitation planning. If drafted thoughtfully, it can benefit the creators not only during her lifetime but also beyond.

(The writer is Head of Wealth Planning, Julius Baer)

 

This is a free article from the BusinessLine premium Portfolio segment. For more such content, please subscribe to The Hindu BusinessLine online.)

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Angel Broking Top Picks For October 2021 With The Highest Potential Upside

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1. Carborundum Universal:

For a target price of Rs. 1060 i.e. an upside of close to 22%, the brokerage recommends to buy the counter. The points highlighted for buying the scrip are as follows:

– Part of the Murugappa group, the company is into manufacturing of abrasives, industrial ceramics, refractories, and electro minerals (EMD) in India. The company products find application across diversified user industries. Also, the company is said to benefit from improving demand scenarios across its end user industries such as auto, auto components,engineering, basic metals, infrastructure, and power.

– The company’s performance in Abrasives and EMD segments has remained good in the June ended quarter. “EMD performance is likely to sustain owing to strong pricing and Volumes (due to China+1 strategy of its customers)”, adds the company.

– Overseas operations improved in Q1 and operations are expected to be at normal levels. EBIDTA for the quarter was up by 172.5% YoY to Rs. 118 crore

while EBIDTA margins also improved to 16.6%. Adj. Net profit for the quarter was up by 305% YoY to Rs. 78 cr.

2. Stove Kraft:

2. Stove Kraft:

Angel broking is bullish on the kitchen appliances counter for a target price of Rs. 1288. This straight away implies gains of as much as 21 percent from the last closing price of Rs. 1067 per share.

Rationale for buying Stove Kraft:

– Stove Kraft Ltd (SKL) is engaged in the business of manufacturing & selling Kitchen & Home appliances products like pressure cookers, LPG stoves, non-

stick cookware etc. under the brand name of ‘Pigeon’ and ‘Gilma’.

– In the Pressure Cookers and Cookware segment, over the last two years, the company has outperformed Industry and its peers. Post Covid, organized players are gaining market share from unorganized players which would benefit the player like SKL.

– Going forward, we expect SKL to report healthy top-line & bottom-line growth on the back of new product launches, strong brand name and wide distribution network.

Disclaimer:

Disclaimer:

The above listed stocks to buy are picked from the brokerage report. Please note investing in stocks is subject to market risks and one needs to be cautious at this point of time as markets have gone-up sharply. Neither the author, nor Greynium Information technologies Pvt Ltd would be responsible for losses incurred based on a decision made from this article.

GoodReturns.in



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Should you go for WealthBaskets on Paytm Money?

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Digital wealth management platform Paytm Money has partnered with WealthDesk to offer curated investment portfolios called WealthBaskets.

The readymade investment portfolios market already has smallcases by smallcase technologies, Stockbaskets (Samco Securities), One Click Equity (ICICI Direct), Theme Investing (Fyers) and Intelligent Advisory Portfolio (Motilal Oswal), to name a few. Here we review WealthBaskets on Paytm Money.

WealthBaskets decoded

Each WealthBasket is marketed as a research-backed mix of stocks or ETFs which aim to give you diversification. They are managed by SEBI registered professionals.

WealthBaskets are classified as per their risk, market cap and tenure. Wealthdesk says that the portfolios are backtested for many years of performance.

A WealthBasket reflects a particular investment theme/idea (Digital, Consumption, Make in India) or sector (Chemicals, Pharma, Banking & Finance) with a set of stocks/ETFs along with their respective allocation percentages.

For instance, the Stable Momentum portfolio currently has 10 stocks (with different weights) and a certain cash component which is kept in broking ledger and available for any future portfolio updates.

All the baskets are subject to rebalancing at monthly or quarterly frequency. Each rebalancing may involve tax implications. There are no restrictions on withdrawal, at the moment. The stocks/ETFs forming part of your WealthBasket reside in your demat account.

Paytm Money’s partnership with WealthDesk is the first step towards creating a wealth and investment advisory marketplace on its platform. At the moment, there are 13 core, thematic, sectoral and model-based investment portfolios on the platform — all managed by Quantech Capital.

For investors, Paytm Money is the transaction platform. WealthDesk is Paytm Money’s technology partner for WealthBaskets. Quantech is the SEBI registered investment advisor (RIA).

WealthDesk, founded by CFA Ujjwal Jain who has previously worked in D.E. Shaw and MSCI, is a unified wealth interface on top of broking ecosystem platform. Quantech Capital is led by Sujit Modi, a CA and ISB alumnus who has worked at Deutsche Bank for 10 years including as VP in the asset and wealth management team that was managing over $10 billion in quant strategies. Modi later worked for over 3 years in index solutions provider MSCI as part of their factor research team.

Plans and pricing

The WealthBasket offering is sold under 3 plans on the Paytm Money app (see table).

Minimum investment amounts for the 13 portfolios range from ₹1,000 to ₹25,000.

The free/starter plan is aimed at stock market newbies. The core plan is for investors who are active investors in MFs, direct stock and ETFs, and who are interested in premium portfolios. There are a total of 7 portfolios under the ‘core’ plan.

The highest-tier is the ‘pro’ plan and it includes portfolios from the ‘free’ and ‘core’ plans. It is for investors who are interested in building a premium core-satellite portfolio with thematic, sectoral etc. exposure. All the 13 portfolios are accessible to ‘pro’ customers. By paying for 6 or 12 months at one go, one can get 40 per cent off on the subscription for core and pro plans.

There are no percentage-based commissions, as in some curated portfolios in other platforms where up to 2.5 per cent (of the investment value) can be charged as access fee. In such a case, the access fee can be ₹12,500 for portfolios that require ₹5 lakh as minimum investment.

Apart from the subscription plan fee, regular brokerage including taxes, may be charged during transactions. Payment gateway charges may be applicable depending on the subscription fee payment mode.

Our take

With WealthBaskets, Paytm Money is providing users access to curated advisory services and products on its app. The flat-fee pricing approach is affordable for investors irrespective of their wallet size.

We like the fact that the portfolios have avoided the standalone midcap or smallcap bias, and instead have gone for a multicap approach. This is important given that many young and millennial investors who constitute a lion’s share of the Paytm Money user base (aged under 35) may think they can take higher risk, but wouldn’t have actually experienced large drawdowns in their short investing experience.

Do note, the past returns of portfolios now are without adjusting for subscription fee and transaction charges, but there is a plan to include all costs in future..

Also, some portfolios can be quite concentrated that may go against the diversification purpose but are necessary to generate higher than market returns as we see in some MF and PMS structures.

As of now, there are 13 portfolios and all are managed by one RIA. This could be due to the fact that Paytm Money is choosing to play it safe. Competing curated investment platforms have allowed scores of RIAs, some even with sub-optimal research bandwidth with regards to active portfolio management.

Paytm Money would do well not to walk down that path as it onboards more advisors and portfolios.

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How you can give life to your lapsed LIC policy

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LIC has announced a window of opportunity to revive lapsed life policies which will be open until October 22, 2021 for individual policies. The insurer periodically announces such opportunities for policy holders who have fallen behind. A similar offer was announced in November 2019 too.

Policyholders should utilise such opportunities, especially now, considering the heightened need for a risk cover. Reviving an existing policy with rates and terms of earlier periods can be beneficial and cheaper as well. Compared to reviving an older risk cover, the expected premium for new life covers from most insurance providers are expected to increase significantly in future. The increase in premiums is to compensate for higher claims post the pandemic and higher reinsurance costs for underwriting term, health, and life insurance policies.

Current scheme

In the current window, policies which are in the premium paying term and have not completed their policy term are eligible for revival. Lapsed policies, which are within 5 years from the date of first unpaid premium can be revived along with a concession on the late fee. According to LIC, the concession is not applicable to high risk covers such as term assurance plans and policies which are covering for multiple risks. Health and micro Insurance plans also qualify for the concession on the late fee.

For a total receivable premium of up to ₹1,00,000 (cumulative unpaid premiums), a late fee concession of 20 per cent is applicable up to a maximum concession of ₹2,000. Similarly, for receivable premium sum of ₹1,00,001 to ₹3,00,000, 25 per cent late fee concession up to a maximum of ₹2,500 and for premiums above ₹3,00,001, 30 per cent late fee concession is allowed up to a maximum of ₹3,000. While a concession on the late fee is being allowed during the specified time frame, there will be no concession on medical requirements.

Ordinary revival schemes

Most policies generally have a grace period of 15 days for monthly payments and one month for other payment frequencies such as quarterly, half-yearly and annual. Post non-payment within the grace period, the policy can lapse. The revival of such a policy is a fresh contract, with the insurer having the right to impose fresh terms and conditions. A lapsed policy can be revived by payment of accumulated premiums with interest and a penalty. You have to submit the relevant health documents too.

In an ordinary revival, upon receipt of unpaid premium plus current interest rate (around 8 per cent currently) within 6 months of the first unpaid premium, the policy is revived. A certificate of good health and medical report as per the policy demands may also become necessary. For a revival on medical basis, medical requirements based on policy specifications will be required for continuing the cover.

Even in ordinary circumstances (outside of the policy revival campaign currently underway), revival schemes are available for making a financially easier return to the insurance fold. But if one has missed more than a couple of premiums, the lump sum payment of the same can be become burdensome. LIC’s special revival scheme can be utilised in such situation. If a policy has lapsed for not more than 3 years (from the date of last unpaid premium), the scheme allows you to shift the commencement date, allowing for the payment of just one unpaid premium, calculated on the basis of age and applicable health conditions. Such an option is allowed only once in the entire policy term and the policy should not have acquired surrender value (reached after paying three full year premiums to LIC). Instalment revival, survival benefit cum revival scheme and loan cum revival scheme are other financially modified options available, if an ordinary revival or special revival are not appropriate for the customer.

In ordinary circumstances, insurance policies can be revived but only within a period of two years from the date of the last unpaid premium. The current offer allows for a five-year window to revive old policies and adds a discount to the late fees being paid as well. Amongst the many lessons taught by the pandemic, the most critical one has been the necessity of an insurance cover and LIC’s current campaign for reviving old policies could not have come at a better time.

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