If you have linked LIC premium EMI through any bank then money will get deducted through ECS (Electronic Clearing System) every month automatically. Your bank runs an ECS on the debit date and if there isn’t enough funds, bank may run an ECS again at a later date (usually a couple of days later, plus the re-run of an ECS is dependent on your bank’s policy.). But if there is no funds in bank account by that date, your ECS will bounce.
Reasons for ECS Dishonour:
Dishonour of ECS mandates may happen due to following reasons:
- Acccount closed / Transfered
- No such Account
- Acccount description does not tally
- Insufficient Balance
- Not arranged for
- Payment stopped by drawer
- Payment stopped by court order
- Mandate not received by bank
For the mandate dishonours, LIC sends a letter to the policy holder intimating the dishonour with reason. Premium for these policies is to be paid at the branch cash counter. If the reason is “insufficient funds”, dishonour charges Rs. 125/- will be payable in addition to the due premiums and the late fee ( if applicable).
If the reason of dishonour is “mandate form not received”, it may be due to non-submission of the mandate form to bank, copy of the mandate form should be submitted to the bank.
For reason 1 , either alternate bank details should be given or payment mode should be changed from ECS to Normal.
For reason 2 & 3, bank details must be checked for the correctness and in case of any error should be got rectified by the Servicing LIC Branch Office.
What to do if ECS/NACH premium payment Bounced?
The treatment of ECS bounce is similar to that of a cheque. Therefore, if the bounce is due to a financial reason, there is a charge. But it is due to a technical reason, there is no charge. There would be a penalty, which varies from bank to bank (from Rs. 350/- to as much as Rs. 500; ICICI Bank).
If you missed it, due to insufficient money in your bank account then a penalty from that bank will be imposed on you. For example – SBI charges Rs. 287.50/- as ACH Return and again LIC too will impose penalty/bouncing charges on you of Rs. 125/- + taxes, which is to be paid in LIC branch with the premium amount after the grace period. If this payment is not made within a stipulated time you may have to pay 2 installments with penalty (for monthly premium mode policies).
When ECS bounces, the next ECS will not be deducted until you deposit the pending and next month ECS as via cash or Demand Draft. Once you made the pending premium and bouncing charges, your ECS will start again.
Things to take Care
1. Policy does not lapse until six months premium is due.
2. The arears with penality must be paid before 15 days of next due. Then only LIC will have time to generate invoice for the next due date.
3. You can deposit LIC premium at any LIC branch.