ULIP is one of the most sought-after investment options across individuals of all ages. After all, you can enjoy dual benefits of ULIP insurance as well as investment. However, there are people who sometimes find it challenging to deal with the tenure of this plan. Though the lock-in period is just five years; but to get the maximum benefits, the experts advise you to stay invested for 15 to 20 years.
Nevertheless, for unforeseen situations, if you need surrendering your ULIP plans, here is what you should know beforehand.
How to surrender your ULIP Policy?
- What is the meaning of ULIP?
ULIP, meaning Unit Linked Insurance Plan, is an insurance plan which provides investment options and benefits as well as life insurance cover. As you take a ULIP plan, you get the benefit of switching between funds, change the levels of protection, and avail added riders. The money you invest in a ULIP plan is used for insurance cover, expenses, and equity Mutual Funds. You can also get ULIP tax benefits as the premiums paid for ULIP qualify for tax deduction under the Section 80C (life insurance) under the Income Tax act.
- Can ULIP be surrendered before five years?
Yes, you can of course surrender ULIP before the lock-in period of five years. However, you will not get the money back instantly. You will get the money only after the lock-in period of five years expires.
- What happens when you surrender ULIP before five years?
As you surrender your ULIP policy, discontinuance charges will be deducted from your fund and the remaining amount is transferred to a Discontinued Policy (DP) fund. The fund manager may charge up to 0.5 per cent of the Fund Value as fee to manage the DP fund. Even when your money is in the DP fund, you can earn interest from it, though the amount will be lesser. If you want to cancel your decision after surrendering the ULIP policy, you can do it within two years. Once you revive your policy, you would need to clear all the premiums that are due, along with the charges for administration and premium allocation. The discontinuation charge will be refunded back to your fund. You must note that if you surrender your ULIP, your insurance will automatically get terminated.
- How do you surrender a ULIP policy?
In order to surrender a ULIP policy, you will have to sign a few documents and submit all documents related to ULIP. In case of any query, you can get in touch with the customer care service team of your insurer.
- How to decide whether to or not surrender a ULIP?
If you are not able to decide whether to close your ULIP policy, you can check the performance of the policy against its standard or competitors. If you find your ULIP underperforming, you can go ahead and surrender it. On the other hand, if it is doing well, you can stick to it for five years and go ahead with money withdrawal from ULIPs without paying any charges.
If you require any more information about the ULIP surrender process or suspect the fund manager of mis-selling of ULIPs, you can get in touch and discuss your grievances to one of our experts at InsuranceSamadhan.com. They can review your policy documents and help you determine if you have indeed been cheated by your insurer, and what shall be your next step to get your money back, or, to get a justified resolution to your concern.
At InsuranceSamadhan.com, we have helped resolve over 12,600 customer grievance cases in the past related to insurance, ULIPs and other financial products.
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