Often times, it so happens that we buy something on impulse and eventually end up regretting the purchase. This also holds good for insurance policy. If you are not adequately well-informed about the policy sum assured, or are dissatisfied with the terms and conditions, several things can go wrong with a life insurance policy.
Here are the 5 things you need to do when you are not happy with your Life Insurance Policy
- Use free-look period: According to IRDA guidelines, the new holders of policies will have 10-15 days to take a decision on termination of their new life insurance plan and obtain refunds. In case they are not happy with any particular facet of their policies, they can use this free look period as it is called, to take a final decision. You can always return your life insurance policy without facing any penalties. All you need to do is contact the insurance company and make them know that you wish to return the policy. The premium will be refunded post deduction of expenses for the stamp duty and medical tests. Always make sure that this happens in the free-look duration so that you can get the refund swiftly instead of having to await the lapse of the policy at year-end.
- Exit plans for Term Insurance Plans: Term insurance plans are some of the most basic yet popular plans for people. They, however, do not have any policy surrender choice. So this means that exiting a term insurance plan leads to you losing the entire sum paid till now via premiums. You can always exit in the free-look period or let the policy expire on its own by not making payment of the premium due annually.
- Purchasing extra riders: The policy may not be satisfying you completely due to various reasons, be it the particular features or a lower sum which is assured. Hence, you can opt for an extra rider for adding to the existing life insurance plan that you possess. This will necessitate additional investments but you will not have to get the policy returned and will instead have to get hold of a new one. With a rider added to the plan, you can boost overall coverage while getting other advantages at the same time.
- Endowment and ULIP surrenders: Suppose you wish to surrender your policies. ULIP and endowment plans usually have 3 years as the lock-in period after which you can surrender the same. In case you surrender the policy in the very first year, there will be zero returns. Post the lock-in period, the surrender value (based on your premium payments) will be given back to you. There will be fund management and other surrender charges payable if you are terminating your policy in year 3. As per IRDA guidelines, if you surrender such policies after 5 years is completed, you will not have to fork out these charges.
- Conversion of ULIP and Endowment into paid-up Policies: The Paid-Up policy concept will benefit you immensely if the endowment/ULIP is not doing justice to your expectations. Simply stopping premium payment without policy surrender will lead to the insurance policy becoming paid-up which indicates that it will go on till the time of maturity. Yet, the benefits will go down in proportion. This is dependent on the tenor (in years) across which you have paid the premiums. As the insurance company, it is not liable for making payments of bonuses in case of paid-up policies. However, prior to the paid-up tag being acquired, all previous bonuses will be due to the policy holder.
You should always invest in life insurance policies post assessing your own financial circumstances. Choose the plan carefully after evaluating your long-term financial goals and needs of the family. Choose the coverage amount and riders wisely. Get your questions answered by industry experts or financial advisors before taking the plunge. Always compare multiple choices before signing on the dotted line.