How to revive inactive PPF, recurring deposit, Sukanya Samridhhi accounts, insurance policies

You might find it difficult to stay committed to long-term recurring investments due to many reasons. However, there are revival provisions to help you get back on track. ET Wealth tells you how.

1. Public Provident Fund (PPF)

The default: Account becomes inactive if minimum of Rs 500 is not deposited in a financial year. However, amount in the account continues to earn interest.

The penalty: No partial withdrawals allowed. Account holder not eligible for loan facility.

Revival process:
1. Approach the post office or bank branch with request for revival.
2. Deposit arrears—minimum Rs 500 for every year of non-payment.
3. Pay penalty of Rs 50 for every year of inactivity.


2. Bank recurring deposits

The default: Missing instalments.

The penalty:
1. Charges levied for every month of non-deposit.
2. Service charge of Rs 10 levied at maturity if three or more instalments missed.
3. In case of six consecutive defaults, the account will be closed prematurely and balance paid out to account holder.

Revival process: Can be regularised after payment of penal charges
1. For tenure of less than five years, penalty is Rs 1.5/Rs 100 per month.
2. For tenure of more than five years, Rs 2/Rs 100 per month.

3. Post office recurring deposits

The default: Missing an instalment.

The penalty:
1. Rs 0.05 for every Rs 5 of instalment amount.
2. Account is discontinued if there are more than four regular defaults.

Revival process: Allowed within two months of fifth default, after payment of default fee.

4. Sukanya Samriddhi Yojana

The default: A minimum of Rs 250 is not deposited in an account in a year.

The penalty: Account treated as ‘discontinued’.

Revival process:
1. Approach the relevant post office or bank branch with request for revival.
2. Deposit arrears— minimum Rs 1,000 per year of non-payment. Also pay penalty of Rs 50 for each year of inactivity.

5. Life insurance policy

The default: Missing annual premium payment before policy acquires surrender value.

The penalty:
1. Policy will lapse if payment not made within grace period (15-30 days).
2. Insured will not be covered during period of non-payment.

Revival process:
Endowment policies
1. Policy can be revived within two years from date of discontinuance.
2. Insurer’s branch office or agent have to be approached.
3. Pay all premiums due, interest, late payment and other penal charges.
4. If policy is revived within six months from due date of first unpaid premium, insurer will not ask for a good health declaration. If not, medical requirements will have to be fulfilled.

Term insurance policies
1. Policy can be revived within two consecutive years of lapsation by paying unpaid premiums and late fee.
2. It is best to buy a fresh cover unless you have a health issue existing insurer is willing to cover, and others are not.

Unit-linked insurance plans
If policy discontinued within lock-in:
1. Policy can be revived within two years from date of discontinuance or insured can choose to withdraw from the policy without any risk cover.
2. Post discontinuation, fund value will be moved to a discontinued policy fund that will earn minimum of 4% per annum and attract a fund management charge of 0.5%.
3. You will receive proceeds at the end of the lock-in.

6. Health insurance policy

The default: Missing annual premium payments.

The penalty:
1. Policy will lapse if payment is not made within the grace period of 30 days.
2. No coverage during lapsed period.

Revival process:
1. Insurer could insist on disclosure of any ailment acquired during period of noncoverage or a health check-up.
2. A policy cannot be revived if policyholder missed more than one premium payment.

7. Motor insurance policy

The default: Missing annual premium payment.

The penalty: Policy will expire. No revival within 90 days of lapsation will lead to loss of accumulated no claim
bonuses.

Revival process:
1. Once approached, insurer will schedule a visit by surveyor to inspect the vehicle for pre-existing damages.
2. Several insurers allow policyholders to carry out self-inspection and upload their vehicles’ pictures for inspection.
3. Post verification, insurers will issue the policy or reject the proposal.


Source: India Post, SBI, LIC, Max Life, HDFC Life and Coverfox.com websites. Note: LIC and other life insurers run special revival schemes from time to time, where additional concessions could be made.