How to Avail of Policy Premiums on Policy Cancellations?

Mar 21, 2018 | 8 months ago | Read Time: 2 minutes | By iKnowledge Team

Are you dissatisfied with the purchase of your insurance policy? Don’t worry, you can still get a refund on your premium.

When shopping online, you tend to choose products with a refund option, right? This is because you have the option to return the product if it does not meet your expectations. The good news is that refund options are not just limited to lifestyle products. Financial products such as Unit Linked Insurance Plans (ULIPs) too offer this option.

Have queries regarding refunds on ULIPs? Let’s hear them out:

  • What are the benefits I get when I purchase a ULIP?

ULIPs offer many benefits to investors. This includes:

  1. Partial withdrawal – ULIPs allow you to withdraw some amount from the fund before the policy tenure ends. This allows you to access funds in case you need them at a short notice.
  2. Fund switching – Based on your requirements and risk appetite, you can invest a portion of your investment in debt or equity. Fund switching is an option that allows you to change funds in your portfolio to protect them from market fluctuations.
  • Can I seek a refund of premiums if I am not satisfied with the policy?

Yes, as the policy holder, you can seek a refund of premiums if you are dissatisfied with the policy. You can do this within 15 days of receipt of the policy document. This period is known as the free look period.

You are offered a refund, subject to deduction of various expenses. This includes stamp duty, medical examination expenses and proportionate risk premium for the period of cover.

  • Why do I get a refund after deducting the charges for unit cancellation?

This is because there are administration and processing fees that are incorporated into the plan. Once these fees are deducted, you receive your refund.

  • What if I don’t cancel my policy but later want to switch funds?

ULIPs allow you to switch funds. This is possible through a facility known as fund switching. For example, if you have invested heavily in equity funds, you can switch to debt funds to sustain the volatility in the stock market. This way, you can protect your investment and maximize your returns.

  • What if I want to remain in the same fund but make partial withdrawals?

You have an option of making partial withdrawals while remaining in the fund. You can cancel a section of units and withdraw a portion of your investment based on your requirement. There is no fixed limit on how much you can withdraw. It varies across policies and insurers.

  • Choice of funds

    Every investor has different goals and risk appetite. That’s why ULIPs allow investors to choose funds based on their requirements. Thus, you can invest in debt funds and/or equity funds based on your investment goals.

The bottom line

ULIP is a unique financial product that offers dual benefits of protection and capital investment. The flexibility offered in the policy makes it a popular choice among customers. Don’t fret, if you have invested largely in equity funds and would like to shift to debt funds. ULIPs allow you to shift between funds as per your requirements.


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