LIC: The largest insurance company in the country, Life Insurance Corporation of India (LIC), has made changes to its online premium payment methods, affecting customers who used credit cards for payments. Previously, customers could pay insurance installments through the LIC website’s customer portal using credit cards, but now only net banking, debit card, and UPI are available as payment options.
Besides online payments, policyholders can still make premium payments through LIC agents or branches. The discontinuation of credit card payments has impacted many LIC customers, as a significant number in the country rely on credit cards for digital transactions.
An anonymous LIC agent explained that the removal of credit cards as a payment option was due to the fees charged by the payment gateway provider, Bill Desk. This service incurred charges for LIC, possibly leading to a disagreement. Although a convenience fee was mentioned for credit card transactions on LIC’s website, the company covered this fee. On the other hand, there are no additional charges for payments made with debit cards, UPI, or net banking. Following disputes over the convenience fee, credit card payments were excluded from the online payment choices.
Another LIC agent shared similar insights on the elimination of credit card payments, revealing ongoing discussions within LIC to collaborate with a different payment gateway provider. The agent expressed confidence in the reinstatement of credit card payments for online transactions. Live Hindustan reached out to various LIC officials for comments, but they were unavailable. Updates on this matter will be provided once LIC clarifies its stance.
Meanwhile a major challenge has emerged for the Life Insurance Corporation of India (LIC) and other insurance companies. In fiscal year 2025-26, policy surrender and early withdrawal payments accounted for 38.3% of total payouts, exceeding maturity payouts for two consecutive years.
Why are surrenders increasing?
According to the Reserve Bank of India’s (RBI) latest Financial Stability Report, this trend has been observed for the second consecutive year. This indicates that policyholders are unhappy with insurance companies and are surrendering their policies prematurely. This is causing companies to incur significant losses as they are forced to make early payments.
Direct impact on profits
The entire business model of insurance companies is to generate profits by investing premium money over the long term. When policyholders withdraw prematurely, companies are forced to break their long-term investments and make early payments. This forces them to hold more money in low-interest liquid investments, putting pressure on their net profit margins.