EPFO members can pay LIC premium using EPF money. Details here

Employees Provident Fund Organisation or EPFO members, who have Life Insurance Corporation of India or LIC policy to their name, are entitled to use their EPF money for paying their life insurance policy premium. According to tax and investment experts, an EPFO member can use its money in EPF account for LIC premium payment provided it has EPF balance to the tune of at least two years of the LIC policy premium. They said that those EPFO subscribers, who are under financial stress due to job loss or any other reason, can avail this EPFO facility to continue their LIC policy with policy renewal payment from the EPF account.

On how an EPFO member can use its EPF money for LIC premium payment; Pankaj Mathpal, Founder & Managing Director at Optima Money Managers said, "An EPFO member can use its EPF money for LIC premium payment. To pay LIC premium from EPF account, they need to submit Form 14 at the EPFO. However, while submitting this Form 14 at EPFO office, the EPF account holder must ensure that EPF balance at the time of Form 14 submission has to be at least two years of LIC premium amount."

Pankaj Mathpal of Optima Money Managers went on to add that EPFO subscribers can avail this facility while buying an LIC policy or in the later stage of the LIC premium payment. So, if an EPF account holder is under financial stress due to the Covid-19 pandemic or any other reason, he or she can still renew its LIC policy by paying LIC premium from its EPF account. What he or she need is to submit Form 14 at nearest EPFO office.

LIC policy renewal rule

On when an EPFO member should use its EPF money for LIC premium payment, SEBI registered tax and investment expert Jitendra Solanki said, "LIC allows its policyholder to renew its policy on late payment of premium as well. As per the LIC premium renewal rules, no late fee is levied on policy renewal after 6 months of policy renewal date. On renewal of LIC policy after 6 months to 3 years of policy renewal date, one will have to pay some late fee in addition to the policy premium. However, if a person fails to renew its policy after 3 years of policy renewal date, then the LIC policy becomes dormant. In my opinion, one should use one's EPF money for LIC premium payment only as last resort. If its LIC policy is about to become dormant, in that case, I would advise an EPFO member to use its EPF money for LIC premium payment."

Jitendra Solanki went on to add that such EPFO facility is available on LIC premium payment only. One can't use EPF account for other than LIC premium payment.