Insurance premium payments that will be be due in the next few days will either have to pay by cheques, demand draft or in lower denominations since the government has declared that Rs 500 and Rs 1,000 notes will no longer be legal tender.
While it was anticipated that there could be some relief for cash payments in Rs 500, Rs 1,000 notes, cash counters at insurance companies including that of Life Insurance Corporation of India (LIC) have stopped accepting it on an immediate basis.
Premiums are accepted in cash, cheque, demand draft apart from online payment using debit, credit and net banking modes.
However, even if the premium is due today or in the new few days, higher denominations will not be accepted.
This would mean that if one does not have adequate cash in lower denominations like Rs 50 and Rs 100 and do not have a bank account, their policy could be at risk of lapsing if the 15-day grace period also passes.
Sector officials said that they would encourage rural customers who do not have a bank account to immediately get through the Pradhan Mantri Jan Dhan Yojana.
While a majority of premium payments are using non-cash modes, rural Indian policyholders do pay cash for premiums.
K G Krishnamoorthy Rao, MD&CEO, Future Generali India Insurance said that since insurers are not included in the exception list for next few days given by the government, hence they cannot accept these notes from today.
However, he said, that since as per the Government’s various initiatives most of the people do have bank accounts now, it is possible for customers to pay the premium through cheque.