We first help you identify what type of life insurance you have because the exit process is different
21-Dec-2022 •Aakar Rastogi
An unsatisfactory life insurance policy is like an unhappy marriage.
We often enter such alliances without knowing what to expect. Perhaps we made a hasty decision or were promised the moon by our relatives or friends...Whatever may be the case, you should be glad you aren't alone.
Such regret is commonplace, especially when it comes to life insurance policies because we understand so little about them.
But we are not here to depress you. Instead, we want to inform you that a life insurance policy's divorce process is relatively straightforward, satisfying and not very messy.
So, let's huddle together to know how you can walk away from this unhappy union.
Understanding the type of life insurance policy you have
Before we get into the step-by-step process of how to surrender life insurance policy, it is very important to understand what kind of life insurance policy you have. (That's because different policies have different exit steps).
What we recommend
Of the three types of life insurance policies, term plans are the BEST! If you have a term plan, stick with it.
But please note there are a few term plans that promise to return the premium amount at the end of the policy. However, such plans are usually expensive and should be avoided.
But if you have a ULIP or an endowment/traditional/money-back policy plan and want to discontinue your relationship, here's what you need to do.
In this article, we will focus on how to exit your ULIP. Please visit this page for those with an endowment/traditional/money-back policy plan.
Surrendering process of ULIPs
ULIPs come with a mandatory lock-in period of five years; no matter what, you can only get the money you have already invested/paid as a premium after completing the five years.
That said, it doesn't mean you must continue paying the premium for the entire five-year period. In fact, it can be stopped anytime.
Things to keep in mind
Surrendering after the lock-in period of five years
The procedure remains the same (as mentioned in the above process). The only difference is that instead of transferring your money to the 'discontinued policy fund', the insurance company will directly pay the proceeds to you after deducting discontinuance charges.
Just to give you a real example, this is how discontinuance charges look for a ULIP by Bajaj Allianz - Future Gain.
Suggested read: Surrendering a ULIP in the lock-in period
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