What an LIC premium deposit is

An LIC premium deposit is a direct deposit arrangement where your Life Insurance Corporation of India policy premiums are automatically deducted from your bank account on a set schedule. Instead of paying your insurer manually each month or quarter, the money moves directly from your bank to LIC on the due date. This is the same direct deposit concept you may already use for salary or other regular payments — the difference is that LIC is the recipient instead of your employer.

The arrangement requires you to authorize LIC to pull funds from your account. You give them your bank details and permission once, and the deductions happen automatically until you cancel or change the setup. Most LIC policyholders use this method because it removes the risk of missing a payment deadline and losing coverage.

Key Takeaways

  • LIC premium deposits pull money directly from your bank account on your policy's due date, so you do not have to remember to pay manually.
  • You need an active bank account in your name, your account number, IFSC code, and your LIC policy number to set up the arrangement.
  • The authorization happens through a form you submit to LIC — either in person at a branch, by mail, or increasingly through their online portal.
  • If your account does not have enough funds on the due date, the deduction fails and your policy may lapse, so you must keep the account funded.
  • You can change or cancel the arrangement at any time by notifying LIC in writing or through their online system.

Documents and information you need to provide

LIC requires specific details to set up a premium deposit. You will need your policy number, which appears on your policy document and any correspondence from LIC. You also need your bank account number and the IFSC code of your branch — the IFSC is a nine-character code that identifies your specific bank branch and appears on your cheques or passbook.

You must provide your account holder name exactly as it appears on your bank records. If your account is a joint account, check with your bank whether both holders need to authorize the arrangement or if one signature is sufficient. Some banks require both; others do not. You may also need to provide a cancelled cheque or a bank statement showing your account details, depending on which LIC branch or office processes your request.

How to set up the arrangement

The most common route is to visit your nearest LIC branch in person with your policy document and bank details. Bring a cancelled cheque or a photocopy of your passbook showing your account number and IFSC code. The branch staff will fill out the premium deposit authorization form with you, you will sign it, and they will submit it to their processing team. Processing typically takes five to ten business days.

If you cannot visit a branch, you can request the form by mail or email from your LIC branch or regional office. Fill it out, sign it, attach a copy of your cancelled cheque or bank statement, and mail it back. This route takes longer — usually two to three weeks — because of postal delays and processing time.

Many LIC branches and the main LIC website now offer online setup through their customer portal. If your policy is registered online, you can log in, navigate to the payment settings, and enter your bank details directly. Online setup is fastest and usually takes effect within two to three business days. Check your LIC branch's website or call their customer service line to confirm whether online setup is available for your policy.

What happens if the deduction fails

If your bank account does not have enough funds on the due date, the deduction will fail. LIC will attempt the deduction again, usually within a few days, but if it fails a second time, your policy enters a grace period. The grace period is typically 30 days from the due date, during which your coverage remains active but you must pay the overdue premium to keep the policy in force.

If you do not pay within the grace period, your policy will lapse. A lapsed policy means your coverage ends and you lose the protection. Restarting a lapsed policy is more complicated than simply paying the next premium — you may need to provide proof of good health or pay additional fees, depending on how long the policy has been lapsed and the type of policy you hold.

To avoid this, keep enough funds in your account to cover the premium on or before the due date. If you know your account will be low, contact LIC in advance to request a payment extension or to arrange a one-time manual payment instead.

Changing or cancelling the arrangement

You can stop the automatic deductions at any time by notifying LIC in writing. Send a letter to your branch or regional office stating your policy number, account number, and request to cancel the premium deposit arrangement. Include your signature and policy document copy. Processing usually takes five to ten business days.

If you want to switch to a different bank account, you do not need to cancel first — simply submit a new authorization form with the new account details. LIC will update their records and begin deducting from the new account on the next due date. Confirm with your branch that the old account has been removed from the system to avoid confusion.

You can also change the frequency of payments if your policy allows it — for example, switching from monthly to quarterly deductions. Contact your branch to discuss options and submit an updated authorization form if needed.

Common reasons the arrangement fails

The most frequent problem is insufficient funds in the account on the due date. Set a reminder a few days before the due date to ensure money is available. The second common issue is a mismatch between the account holder name on file with LIC and the name on your bank account — banks reject deductions when names do not match exactly, including spelling and middle initials.

Account closures also cause failures. If you close the bank account linked to your premium deposit, LIC will not be able to deduct the premium. Always update LIC with a new account number before closing an old account. Similarly, if your bank merges with another bank or changes branch codes, the IFSC code may change — contact your bank to confirm the current code and update it with LIC.

Occasionally, technical delays between LIC and the banking system cause temporary failures. If a deduction fails but you know your account had sufficient funds, contact your branch immediately to investigate. They can often reprocess the payment manually or confirm whether the issue is temporary.

Frequently Asked Questions

Can I set up premium deposits for more than one LIC policy?

Yes. Each policy can have its own premium deposit arrangement, and they can all deduct from the same bank account or different accounts. You will need to submit a separate authorization form for each policy. If multiple policies have the same due date, all deductions will happen on that date, so ensure your account has enough to cover all premiums.

What if my bank account is frozen or has restrictions?

If your account is frozen or restricted by the bank, the deduction will fail. Contact your bank to understand why the restriction is in place and whether it prevents outgoing transfers. Once the restriction is lifted, contact LIC to request that the deduction be reprocessed. You may need to make a manual payment in the meantime to keep your policy active.

Can someone else authorize the premium deposit on my behalf?

Generally, no. LIC requires the policy owner or a legally authorized representative to sign the authorization form. If you are unable to visit a branch, you can authorize someone with a power of attorney to submit the form on your behalf, but you will still need to sign the form itself. Contact your branch to confirm their specific requirements.

How long does it take for the arrangement to start working?

Online setup usually takes two to three business days. In-person submissions at a branch typically take five to ten business days. Mail submissions take two to three weeks. The first deduction will happen on your next policy due date after the arrangement is activated, not immediately after you submit the form.

What happens to the premium deposit if I move to a different city?

The arrangement continues to work as long as your bank account remains active and your account details do not change. You do not need to update LIC simply because you moved. However, if you change banks or your branch changes, update your account details with LIC to avoid deduction failures.