What is ECS?

ECS is an acronym for Electronic Clearing System. ECS Debit is an RBI-run scheme for paying bills at regular intervals through cheque. The facility works where regular clearing operations exist. The amount is recovered from your account on a prefixed date and the records are updated for monthly premiums. 

The system is reliable, hassle-free, and time-saving. Let us find out what you must do to register for the facility. 

Eligibility for LIC ECS Premium

You must fulfill the following criteria to apply for LIC ECS:

• You can opt for the facility at the proposal stage or later in policies that allow monthly premium frequency.

• You can choose ECS for ULIP at the proposal stage.

• Choose ECS for monthly premium at 5% lower than other monthly payment modes.

• You do not receive any monthly ECS premium payment receipt but can request a yearly certificate for the financial year. 

• Debit dates are calculated based on the premium commencement date. 

  Commencement Date	ECS Debit Date
  1st to 7th	7th of the same month
  8th to 15th	15th of the same month
  16th to 31st	28th of the same month

• You cannot collect an arrear premium through ECS.

Procedure to Register for LIC ECS

Registration for the ECS premium facility at LIC is well-defined, whether in the proposal stage or later. Here is a closer look at the steps to register:

• Submit the mandate form at the LIC branch where the policy is purchased. The form must contain:

  • Your signature as the policy and account holder, duly attested by the bank.

  • Attach a canceled cheque with the form.

  • Hand over a copy to the bank.

• Insert the valid 9-digit MICR code in the mandate form. You can find the MICR code in Passbook or the cheque leaf in the middle of the MICR band.

• State the correct account number in 15 digits.

• Prepare the mandate form in triplicate – first for LIC, second for the bank, and third for personal records. 

LIC Premium ECS Benefits

The benefits are many for choosing the ECS premium payment mode as a policyholder. Let us list them out:

• Save time and energy

• Savings on the courier cost for sending your premium to the LIC branch office 

• No unintentional default

• One-time standing instruction in a mandate continuing for the entire policy term

• You can choose ECS premium payment for personal policies, including your dependents whose premium payment is your responsibility. 

• Claim a tax deduction for every premium you pay, including your dependents. 

How Does the LIC Premium ECS Work?

Since it is linked to the RBI’s clearing system, the debit on the designated date is aligned with RBI’s clearing timings. At present, the entry is posted online through centralized processes. The debit is either validated or rejected for specified reasons. For failed payment debits, the ECS mandate may be considered dishonored. But what happens if one or more ECS payments are missed? 

Reasons for LIC ECS Premium Mandate Dishonor

Here are some reasons to dishonor the LIC ECS premium mandate:  

• Account closed / Transferred

• No such account

• Account  description mismatch

• Insufficient funds

• Not arranged for

• Payment stopped by the drawer

• Payment stopped by court order

• Mandate not received by the bank

• Miscellaneous

Consequences of LIC ECS Premium Dishonor

The ECS dishonor affects your premium payment schedule and several steps are involved in remedying the failure. In the first step, LIC sends you a letter intimating the dishonor and the reasons, requesting the pending premium payment in cash. 

Here are some specific return cases:

• If the reason is “Insufficient Funds,” you must deposit the premium at the branch cash counter. It implies that the balance in your account was not enough to debit the premium amount. Your responsibility is to keep your account adequately funded before the scheduled ECS debit date. First, however, you must clear the premium adding Rs.125 return charges plus the applicable late fee.  

• The “mandate form not received” reason implies that you have not submitted the form to the bank. 

• Provide alternative bank account details if the return reason is number 1. 

• Recheck your bank account details for reasons number 2 and 3 and rectify them at the LIC branch if found erroneous. 

Steps to Regularize the LIC ECS Premium Dishonor

Your premium becomes pending as the ECS debit has failed. If not regularized in time, your policy is in default, and you are liable to lose risk coverage. So, how do you rectify the unwarranted deficiency? 

Deposit the dishonored premium plus the penalty at the LIC branch cash counter even before you receive the dishonor intimation. Alternatively, if you are a registered user at the LIC Customer Portal, log in and pay the premium, including the applicable penalty. 

The advantage is that you do not have to check for the payable penalty as the amount is automatically fetched. Most importantly, the following ECS schedule is not affected and continues as usual. 

In Conclusion

ECS debit for LIC premium payment is a boon for policyholders who have opted for the monthly frequency to make it affordable. ECS helps in regulating monthly premium payments thereby providing peace of mind. However, you must keep your bank account adequately funded to avoid missing the scheduled payment and inviting unwanted hassles. 

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