What happens if you stop your ULIPs before 3 years

Lets Discuss quickly what happens when you stop paying your premiums in ULIPs before 3 yrs . So here is an interesting question and very bad answer. Its already there in your ULIP Brochure , but you never had the time to look at it .

Read What are the Most Important questions you should ask from a ULIP agent ?

One of the readers on this blog asks me

“I started investing in a sip of Lic Plan Money Plus T-193.I was assured of atleast 20% returns, but I FoundĀ  out recently that my surrender value is much lesser than what I have invested. So I want to stop freeze this policy.But the agent says that the value of units will also freeze and I will not get the amt. as per the value of units at the time of lock in period. So when the lock in period is over(3 years), Iwill get amt. as per the current rates of the units. How far is it true

Now This is True , in LIC Money Plus and some other ULIPs, If you stop paying your Premiums but then your Units will be sold that time and your money will be Kept in Money Terms which you will get back after the lock in period is over . So for an example , if you take policy in Jan 2008 and Stop your premiums before 3 yrs of lock in period , you will get back the amount after 3 yrs are over , but the amount will not be as per the NAV after 3 yrs , but at the time when you stopped your ULIP payments. Note that you will get back your money only if you have paid full 1 yrs premium , If you have paid anything less than 1 yrs , then you wont get back your money if you stop it . All this information is generally never passed to Investors because of Heavy misselling in ULIPS

Now this is the rule from some of the ULIP’s , not all .. Some Ulips give you a choice of surrendering the Policy when you want , so you can tell them that you want them to sell your units or not . If you want , they will sell those and Keep it with them and then give you back after Lock in period of 3 yrs are over . You need to check your ULIP if its a choice or a forced rule . Check your Policy Documents and Find out whats written there .. Before Buying a Product make sure if a product suits your Requirement

Other Important Rules applicable when you Stop Paying premiums before 3 yrs

  • Your Insurance Cover will immediately be Ceased , so you are not covered for any amount once you stop the Policy
  • The Death Benefit is just your Fund Value
  • Other Charges like Fund Management Charges and Yearly Expenses will still be Deducted .
  • You can revive the Policy after 3 or 5 yrs depending on the Company rule

Question : So it means that If I stop My policy (means Premium Payments) before 3 yrs , I will still get back my money after 3 yrs ?

Answer : Yes, Many people think that They have to pay the premiums for atleast 3 yrs other wise they will not get their money back , That’s not true .


Who is to blame here ? Company or the Agent , my vote goes for the Investor Himself , Agent or Company are to be blamed , but for very less part . If you stop your Premiums before 3 yrs Its a costly Affair . So better buy your products before much thought and planning . ULIP’s are only to be bought for long term and you should be able to manage it well .

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263 CommentsAdd Comment

  1. sunil kamble

    I had purchase a LIC policy in 2010 and paid the premium for 8 months but due to some financial condition i was not able to continue then after 2 year i again purchase a policy which i paid the premium for 10 months and was not able to continue …. . Today i rcvd a call from reliance stating they will do some fund managment and will genarate a NOC to which i will get my money back with bonus but for that i need to purchase a policy from reliance and then only they can do the fund managment. The reliance policy is for 25000/- and as they is no broker in middle i will rcv a cheque of 50% within 45 days.

    Is this a fraud call ?

  2. Narendra kumar

    Hi, i have icici pru life insurance cash back,strated from 2013 and have paid three consecutive premium. Now i want or due to some problem freeze my policy. How will i get lumpsum and how long to take my amt?

  3. Nagarajan

    I bought a Unitgain insurance in 28.8.2004 at Bajaj Allianz and paid 2nd premium on 2005 Aug Rs.10000+10000 . I am not paid 3rd premium. The company said policy lapsed. Any possibilities to get some amount in my policy according to IRDA? Please answer.

  4. Ved

    Hello Sir,

    I want to know that I have paid 10,000 each for three subsequent years2007 to 2009 in LIC moneyplus policy for a claim value of 100000(Accident Benefit)/100000 (MEdical Benefit )for 20 years from 2007 to 2027.

    I want to surrender my policy now.
    what will be my total sum which I will receive?
    Will it be less than 30000, or will it be 30000+surrender money.
    Kindly elaborate the process.
    Looking forward to hear from you.
    Vedant Pratap Singh

    • Hi Ved

      The best answer you can get only from the agent you invested through or just contact the company. The thing is your case is a bit personalised and other than company, no one can give accurate information


  5. ashok kumar gupta

    Dear Friends,
    It is suggested that never by ULIP plan in future with any insurance company as they are making fool to the customers as they are paying less than the normal FD rates available in the market even less than the SB account. The HDFC divisor advised me to takeout money from FD and bank will give a return of 15-20% per year. But I was surprised that after 2 years the return was only 2% less than the normal bank interest. When I approached to the branch Manager & CMD of the company the response was negative neither they give a guaranty for % equal to FD nor SB interest rate. I observed that it is always better to invest the money in the FD or PPF which is the safest money but never invest money in the insurance or mutual fund or in any shares. You will realized that the money value you will received after 5 years or 15 years does not have any value due to the inflation as it reduce 5 to 8 % annually, you will get a pea nuts after 15 years whereas insurance company gets a growth return of 20% to 25% per year but customer gets only 5 to 6% returns. Hence please pass this message to your friends never invest money in ULIP, Life insurance, Mutual Funds, SIP etc if you really wants to save your money. It is better to invest your money in term plan or mediclam or better risk coverage. regards, ashok

  6. Ajay chakraborty

    p I have paid Aegon religare life insurance money back plus 3 nos plan (Open 1 no 2011& other 2 nos 2010)more than lakes ,3 nos policy /year. I have paid first premium in 3 nos plan. i shall paid only single premium -3 nos plan. I do not pay 2nd,3rd, 4th year, so terminate/laps the plan. so question that ,I am get any amount,I talk to Aegone religare verbaly told after 10 years you got bonus only.

  7. Vijay

    I have taken a ING life insurance(Exide insurance now) in 2010, i have completely paid 1 year of premium 48,000. I did not want to continue the same so as per the policy as i understood i can wait for 5 years and then get my invested money back of course by deduction fund management and admin charges, its going to complete 5 years in few months now but i get a check for 9000 from exide insurance as foreclosure, i don’t understand if they can do it and if they can take 70% of money as surrender charges when i have not surrendered. please suggest, customer service was not able to give me good answer. as in the policy doc it says no surrender charges will be levied after the fifth policy year irrespective of number of years of regular premiums paid.

    thanks in advance

    • navratan

      Dear Vijay,
      Could you please tell what happened to your case. The same problem is happening with me, Taken 2 policies of Bajaj Allianz for the premium of 10,000 each and unfortunately paid only 2 premiums. That means invested 40,000 but now getting only 6500 odd rs.

  8. Arun

    Hi Manish,

    Just went through the above conversations and felt you could advice me.

    I have an HDFC UL Young Star Champion, which I started on 04/01/2010.
    Regular premium is Rs.5000/month and sum assured is 300,000.
    Plan maturity date is 04/01/2025.
    I have seen a substantial growth in my fund value during last 12 months.
    I have the following doubts and request you to help clarify.

    1) Since the minimum payment period of 3 yrs are over, what will be the amount which can be withdrawn if I do it now? Is it the total fund value?
    2) What will be the amount available if I stop paying and withdraw at maturity date?
    3) Do you advice me to continue paying Rs.5000/month till the maturity date?

    Thank you.

    • 1. Yes

      2. That will be depending on the market fluctuations, so one can give you an amount in that

      3. It all depends if you can take the volatility or not . If you are ok with it , you can continue !

  9. Deepak Rawat

    After paying first premium due to certain reason I suspended the next premiums in 2010 after some time I got the call that my policy can be regularized if I can submit fitness certificate but even after submitting premium and certificate they didn’t regularize and returned cheque to me. Now I am getting calls from them if I can submit them NOC amount (20%) they can return the money to me which is now almost 1 Lac.
    is it true or I am just getting the fake calls.

  10. Nidhi

    Hi Sir, I had taken HDFC Young Star Super Growth Fund II starting date 29/08/2010 and paid reqular Premium of 15k/year for 3yrs. I would like to surrender the policy. Do you I should keep it for another year or simply surrender it? Also, how much deduction should I expect if I surrender the policy now? Current value is approx. 57k.

  11. Abhishek Sachdeva

    Hi Manish,

    I have a Canara HSBC Policy with a premium of 25000 annually. I have paid 5 premiums ( 1,25000 ) till date.
    Now my surrender charges is 0 as i have paid 5 premiums. As on date my fund value is Rs. 1.18,735. Now i just want to ask if i surrender the policy in this year how much amount i will get? As the surrender charges are nil. Will i get some interest on my fund value or there are still some more deductions? Please guide me about how much will i get approximately. Regards,

  12. kripa.

    HI Manish,
    boutgh ”Aviva I growth” ULIP Plan as 4166 SIP (50000 Yearly) in this month only for 20 year.
    Please guide this policy is good for future performence and also and what is track record of this plan…should i run this or i have 30 days for cancel this….kindly guide


  13. simmie

    I would like to ask that whether there is any option in LIC for change / switching of fund type in one time paid premium (FD).

  14. Radhakrishna

    Hi Manish…
    I would like to know if the policy is traditional policy and I have not paid it completely 3 yrs… I have only paid it for two years. Is there any chance that I get any amount of money that I have paid for premium… Is there any chance for that?

    Thank you.

  15. Yash

    Hi Manish,

    I have ULIP from MaxNewyork Life insurance, which i bought in Jan 2007 with annual premium of 20000/- i paid for the first 2 1/2 years however due to discrepancy with my Bank my ECS didnt got renewed for last 2 premiums.

    In total i paid 50000/- In midst of this i lost my policy docs and found this week.
    so its been more then 5 years now that discontinued and Lapsation of the policy.
    I tried to reach insurance company to seek the guaranteed money, after long debate with a supervisor on call, I was told they have released a check last year which i didnt received when informed the same they have advised to submit the policy docs to get the check with out informing the amount that would be returned to me.

    Please help me to claim the correct amount and how do one calculate it?

      • Yeshwant

        Yes, i went to the Office, first they denied me getting any amount in return, but when they checked the details with the Policy no, they were saying an check was issued for some Rs 11340.00 but when i said i didnt received any such amount they requested me to provide my bak account details as they would reissue if the amount is unclaimed not sure if 11340 is justifiable for amount paid in Rs50,00 abot 5 yrs ago now am seeking legal help to this thing sorted out. request you to give your opinion on this please?

  16. surya deo

    i deposte app 41000 in lic as a one instalment . after one installment i can not deposit it . may i reclaim it back and how i can claim it

  17. PG

    Hello Manish,

    I surrendered a ICICI Life Time Super ULIP Pension policy recently thinking that 5 year lock in period was over. Unfortunately the 5 year period was ending one day after I surrendered the policy. The ICICI Prudential staff were well aware that I was surrendering it under the belief that the 5 year was over but they did not bring this to my notice and deducted 2% as surrender charges from my already poor fund value (have received hardly 3.5% returns on amount invested). Now my another concern is whether the surrender proceeds will be taxable and how tax is to be calculated. I had paid premium for the mandatory period of 3 years and not claimed any deduction for the premiums paid.

    The surrender proceeds were credited to my account after the 5 year period was over. Can this give tax relief if nothing else?

    Kindly advise,

    Thank you and best regards,

    C Jain

  18. Kannan m.

    I have paid lic ulips for 3 years and stopped , It has been more than 4 years now some are less than the amount invested and some are equally bit more.

    suggest me what shall I do , whether to withdraw or wait for 5 years to complete?

    will I loose anything if i withdraw now rather than after 5 years.

    is that taxable b4 5years?

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