New Rules You Should Know About Life Insurance Corporation of India

Life insurance is more than just a financial safeguard; it’s a long-term commitment that protects your loved ones and ensures financial continuity. As the insurance industry evolves to become more transparent and customer-friendly, regulatory changes and policy updates are implemented regularly. One of the most significant players in this space is the Life insurance  Corporation of India, better known as LIC, which remains the country’s most trusted life insurance provider.

By the third quarter of 2025, LIC has adapted to several new guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI), along with internal reforms designed to improve customer experience, enhance claim transparency, and offer better returns.

In this article, we break down the new rules and updates from Life Corporation of India, how they affect policyholders, and what you should do to stay compliant and make the most of your policy.

Why New Rules Matter to LIC Policyholders

The Life Corporation of India has been adapting its policies to meet modern-day expectations-digital convenience, faster claims, improved product offerings, and better investment returns. The newly introduced rules reflect a commitment toward these changes. If you’re already a policyholder or planning to buy a new LIC policy in 2025, understanding these changes is vital for maximizing your benefits.

Key Rule Changes in LIC You Should Know

1. Mandatory e-KYC for All Policyholders

To streamline documentation and enhance security, LIC now requires all new and existing customers to complete their e-KYC (Know Your Customer) process through Aadhaar-linked verification. This streamlines policy modifications, claim procedures, and premium payment updates.

Impact:

• Faster onboarding

• Reduced risk of fraud

• Seamless digital servicing

2. Digitization of Policy Services

LIC has enhanced its digital portal and mobile app with improved features. Most policy services—loan against policy, premium payments, bonus check, nominee update, and address change—can now be done online without visiting a branch.

Impact:

• Time-saving

• 24/7 access to policy information

• Enhanced user experience

3. Revised Surrender and Maturity Values

Under new IRDAI guidelines implemented by LIC, surrender value and maturity calculations have been updated to make them more policyholder-friendly. Policies now offer improved guaranteed surrender value, especially during the early premium-paying years.

Impact:

• Higher payouts on surrender

• Fairer early exit options

4. Policy Revival Period Extended to 5 Years

LIC now allows revival of lapsed policies within 5 years from the date of first unpaid premium, subject to terms. This timeframe used to be restricted to two years.

Impact:

• Easier reactivation for lapsed policies

• Additional time to restore financial planning

5. Grace Period Standardization

For monthly premium policies, the grace period has been standardized to 30 days, bringing it in line with quarterly and annual modes. This gives all policyholders equal flexibility in case of late payments.

Impact:

• Uniform rules across all policy types

• Improved flexibility for policyholders

6. Enhanced Death Claim Settlement Process

LIC has simplified the documentation process for death claims. For high-value policies, digitized claim submissions and optional video verification are now available.

Impact:

• Faster claim settlement

• Better experience for beneficiaries

7. New ULIP Rules

• Greater investment clarity

• Improved decision-making for ULIP investors

8. Premium Payment Flexibility

LIC now allows premium payments via UPI, credit cards, and e-wallets without additional service charges. Customers can also schedule automatic deductions via e-mandate

Impact:

• Simplified and secure transactions

• Better premium management

9. Climate-Conscious Investment Norms

As per the latest ESG (Environmental, Social, and Governance) guidelines, LIC has aligned its investment strategies to include green bonds and sustainable sectors. Policyholders will now indirectly contribute to environmentally responsible development.

Impact:

• Socially responsible investments

• Positive environmental impact

How to Stay Compliant with These New Rules

To benefit from these new guidelines, here are a few actionable tips:

• Complete your e-KYC via the LIC portal or nearest branch

• Keep your contact details (email, mobile) updated

• Download the LIC mobile app for policy tracking

• Set up e-mandate for automated premium payments

• Check fund performance monthly if you hold ULIPs

• Take note of the new surrender and revival terms

Frequently Asked Questions (FAQs)

Q1. What is the latest e-KYC rule in LIC?

LIC now mandates Aadhaar-linked e-KYC for all new and existing policyholders to enable seamless online services and verification.

Q2. Can I pay LIC premiums via UPI or wallets in 2025?

Yes, LIC now accepts premium payments through UPI, credit/debit cards, and wallets with zero additional service fees.

Q3. Has the grace period changed for monthly policies?

Yes, the grace period for all premium modes, including monthly, has been standardized to 30 days.

Q4. How can I revive a lapsed policy under the new rules?

You can revive a lapsed policy within 5 years by paying pending premiums along with applicable interest, subject to underwriting rules.

Q5. Do the new rules affect maturity benefits?

Yes, the revised surrender and maturity values offer more favorable terms for policyholders, especially those exiting early.

Conclusion

The Life insurance Corporation of India has taken a significant leap in aligning its services with modern customer expectations and regulatory norms in 2025. From digitization and simplified claims to improved investment structures and greener initiatives, LIC is evolving in a direction that favors transparency, policyholder convenience, and better returns.

If you’re unsure about which LIC policy aligns with these new updates or need help navigating the changes, consult the expert advisors at Square Insurance. Their unbiased guidance and end-to-end policy support ensure that your investment in LIC continues to meet your life goals—safely and smartly.