LIC Policyholders Alert: This Online Service Has Been Discontinued
Credit card facility removed from customer portal
The withdrawal of the credit card option has affected a section of customers who regularly relied on that payment method for premium deposits. Credit cards remain widely used for digital spending, making the change noticeable for many policyholders.People logging into the online portal will now find only three payment methods available. Debit cards, Unified Payments Interface (UPI) and net banking continue to function as before, allowing customers to complete premium payments digitally.
According to people familiar with the matter, the decision is linked to payment gateway charges associated with credit card transactions. Although a convenience fee appeared during such transactions, it was reportedly borne by the insurer rather than passed on to customers.
This arrangement is believed to have led to differences regarding transaction costs, ultimately resulting in the removal of credit cards from the list of accepted online payment methods.
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Alternative payment gateway under discussion
Industry insiders indicate that discussions are taking place to integrate another payment gateway for online collections. If those efforts are successful, the credit card payment facility could return to the portal in the future.For now, there has been no official timeline regarding the possible restoration of credit card payments. Until any further announcement, policyholders will need to use the available digital payment options or continue paying through branches and agents.
Another challenge emerges for insurance companies
The payment system change comes at a time when insurers are dealing with another significant issue. A growing number of policyholders are choosing to surrender their insurance policies before maturity, increasing financial pressure on insurance companies.During the 2025-26 financial year, payouts made on surrendered and prematurely withdrawn policies accounted for 38.3 per cent of total claim payments. This marked the second consecutive year in which surrender-related payouts exceeded maturity claims.
The trend suggests that more customers are ending their policies before the agreed term rather than continuing them until maturity.
Early exits put pressure on long-term business
Insurance companies rely heavily on long-term premium collections, investing those funds over extended periods to generate returns. When policyholders surrender contracts early, insurers must release funds much sooner than originally planned.This can disrupt investment strategies, as companies may need to liquidate long-term investments before they reach their intended maturity. At the same time, insurers may be required to maintain a larger share of their assets in liquid instruments that generally offer lower returns.
Such a shift can reduce investment income and place pressure on profitability over time. Higher surrender levels also make it more challenging for insurers to plan cash flows efficiently, particularly when large numbers of policyholders seek early withdrawals.
While the removal of credit card payments affects the customer experience on the digital front, rising policy surrenders represent a broader business challenge for insurers. Both developments highlight the changing landscape of insurance services, where operational decisions and customer behaviour continue to shape the sector.
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