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 Found  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 .

* Dont forget to check out the New Forums added in this blog

255 CommentsAdd Comment

  1. Damn that is so annoying. Most of us don’t bother to read the T&C completely and understand the intrinsic details. Thus we fall in to the trap and lose our money. We need to know the details before investing in any policy. Sadly this can only come when the investor has the right set of questions to ask the agents and there by get the awareness.
    .-= Mohan´s last blog ..Solar Electricity – Part 3 =-.

  2. Hello Manish,

    It is not worth investing in the MoneyPlus. As you told, there is more number of mis selling in the rural areas to tell the policy taker as the money will be doubled after 3 years some thing like that. Agents are nor exploring the facts of the product.

    .-= Krishna´s last blog ..Verify Tamil Nadu District Patta Details =-.

      • PRASAD

        If the policy can sustain the mortality & sufficient to take care of the policy for another three years, than yes u may get the money back, or else there is a possibility that u may not get anything back. it is a wrong myth that the agents make good money in the 1st three years, sorry no…. it varies anywhere between 5-7% in the 1st year & 3-5% in the subsequent two years… Further I always suggest pl continue to pay for a long term as long as ur comfortable to pay & allow it to be there for atleast for 10-15 years horizan…. u will see better returns & for more beneficial than a MF. Dont stop LI products with three years pay. otherwise dont purchase them, unless it is bought with a specific purpose… even if u stop paying let it be there & allow it to grow & take it at the right time. The only {“MANTRA IN MARKET RELATED PLANS IS “TIMING THE MARKET OR TIME IN THE MARKET.”}

        • Prasad

          Why do you say that it varies anywhere between 5-7% in 1st year ? Its know that ULIP’s first year agent commission is around 30% , Are you talking about LIC ULIP’s in particular , may be its true in that case .


          • Haladhar Panigrahi

            As per the guidelines of IRDA, now the commission of all ULIP policies have been reduced to 7% in first year and 2-3% in subsequent years of the Premium Paying Terms. Even some companies pay only for the first year @ 2-3% if it is a Single Premium Policy of ULIP and not any more. So this maximum limit of commission is fixed for all companies without any minimum limit.

    • kamlesh

      bhai insurance ka funda alga hai. pahale app lo mediclaim then term and then investment plan. but peoples do exact revere and then think what they had done is wrong.

  3. Himanshu Vats

    And i have invested in one this year….so have to pay in it for next 2 more in order for the unit to keep growing whatever amount it grows to. :(

    • No Himanshu ..

      Seems like there is some confusion . You can stop your Premiums after 1 yrs payment , after that its depends on your company ULIP rules , if it will stop growing or not !! .. check your policy documents whats written there ? So do not invest more in it if you are not satisfied and can make better investment decision .


  4. Kiran

    Hi manish,
    I also had a same problem with HDFC Ulip, wanted to stop it before 3 years. I was adviced to continue the policy for 3 years then stop it. If stopped after 3 years the policy can be made as paid up. Is this advisable?

    • What is meant by making it “Paid-up” after 3 yrs .. In Ulips , its your choice if you want to pay for 3 yrs or continue . Its your choice to sell the units and take everything or let is continue to grow .

      Who advised you to continue for 3 yrs ? It must be agent who gets a good chunk till first 3 yrs , anyways after 3 yrs his commisions drops so much that he is not atall concerned if you continue or not .

      If you ask me , I would say you better continue it for full tenure (thats the way you should go) , or get out of it when you feel its not correct .. there is no compulsion that you have to pay for 3 yrs . Just that your money will be locked for 3 yrs . thats all .


      • Kiran

        Hi Manish,
        Thanks for the info. The advice was given at the front desk of the Insurance company ! Anyhow I have stopped the ulip now, I have not withdrawn the amount invested. Should I leave the amount to grow or should I withdraw and invest it elsewhere ? If the value of the ulip dips, will I lose all the money invested? Should we monitor the ulips value frequently.



        • Manish

          If its less than 3 yrs , you cant do anything , you have to wait till 3 yrs to take money out .

          If its more than 3 yrs , now its your choide what you want to do. I would say get rid of it and start your fresh investment planning .


        • Rahul Sadawarte

          I wold suggest following starategy.
          1) if the current value is more than total investment – Surrender the Policy
          2) If the amount is less, check for the % loss and take a decision. If you think that you can book the losses, exit from the policy
          3) If you continue with the policy make sure you understand that the Company will deduct below charges in the form of units
          1) Insurance maintenance charges – Monthly basis with Service tax

      • dais

        Hi Manish,

        I have paid the first premium for future generali Ulip of Rs 22,000. I have decide that i will surrender it after 3 years without paying any more premium.Recently, i heard the lockin period is changed to 5 years.So do I need to wait for 5 years to surrender it. First premium was paid on Oct 2009.

        • Dais

          Did the rule came after your buying the policy ? In which case the mandatory lock up period might be 3 yrs only , however even if its 3 yrs , the surrender charges are generally NIL only after 5 yrs, also if you sell it before 5 yrs , then the proceeds will be taxable , nothing to do with the new rules regarding these .


  5. Suresh

    Hi Manish,

    I’ve a query. I had taken a ULIP from LIC and had made initial payment of Rs.5000/-. But due to unforseen circumstances I could not continue paying the premium. The policy was taken in Jul 2008. Now is it possible for me to revive this ULIP by making the payments+late fee

    Please clarify.


    • Was this premium which you paid for full 1 year ? Or was it for just 3 months or 6 months . Revival of policy is generally possible only if you have paid your premiums for 1 yrs and then stopped . Most of the ULIPS allow reviving till 3-5 yrs after stopping the policy ,

      make sure you have enough reason for continuing the policy , May be stopping it was a great decision even if not intentional :)


    • Rahul Sadawarte


      Is the ULIP policy is a Single premium policy ? In case of single premium no need to pay the next installment. You can surrender the policy after 3 years by selling the no of units at corresponding NAV.

  6. shantharam


    I have a query with ULIPs. i have made the premium payments for 3 years and now i have stopped. Will my sum assured be reduced accordingly ?
    Also, will the accumulation of the fund value stop at 3 years or will continue till the end of the term ?

    in that case, When will be the accumulated fund value be given to me ?

    Your views..


    • Shantharam

      After you pay your premiums for ULIP and stop .

      You insurance will still be there and mortality rates will be cut every year from your Fund value . Your Fund value will move according the fund performance . You can take your money out whenever you want .. Just make sure that you try to take it out after 5 yrs .. so there are no charges .


      • Shantharam


        Might be a stupid question…but will the sum assured be reduced in proportion of the premiums paid ?


      • Akhil

        There is one small correction, manish… once you stop your premium payment… cover will blow off not reduced down specially in ULIP PVt Company case… LIC offer few plan which reduced the sum assured after stop paying the premium but not pure ULIP plan.

  7. balbir2997

    Hi Manish,

    Can you suggest any Tax saving scheme Please. I have two ULIP from HDFC so that I could claim under section 80c as tax benefit, I am wondering if I stop my ULIP then where should I invest to save tax ? Is all taxing saving scheme has locking period of 3 years ?

    for long term I have already planned for HDFC Top 200 (G) thorugh SIP, Also is there any charge on premium of SIP to HDFC Top 100 if I buy from ICICI bank? or should I direct go to HDFC mutual fund and buy this product directly there ?

    Thank you,

    • Balbir

      You should always link your long term plans with your tax saving instruments (atleast try) , so that you dont feel any issue by locking them . Minimum lock in is 3 yrs in any instrument , MF , and ULIP have 3 yrs lock in , Tax saving FD has 5 yrs, PPF 15 yrs, NSC 6 yrs :)

      So for long term plan with tax saving MF (ELSS) . try Sundaram , Canera rebaco and HDFC taxsaver .

      Also ICICI will charge Rs 30 or 1.5% which ever is lower for every SIP , HDFC has Rs 100 flat for 3 months i guess (confirm this)

  8. Balbir

    Thanks Manish for your reply..

    “Also ICICI will charge Rs 30 or 1.5% which ever is lower for every SIP , HDFC has Rs 100 flat for 3 months i guess (confirm this)”

    While going through many articles in jagoinvestor, somewhere in comment I read like

    If I buy mutual fund from agent (Bank) instead of AMC (fund management house) then every premium there is
    some charge levied by agent. So you suggested to buy directly from the fund house.

    Could you please provide me that URL link of your article.

    When I start reading any article in jagoinvestor then it is like breathking reading of a suspense novel which leads
    to late night sleeping, I just keep following everylink and all tabs in firefox becomes jagoinvestor and value search.
    Just like wikipedia.. :)

    Thanks for educating people like me, who is illiterate in investment domain. I made mistake in initial year, but ‘der aaye durast aaye’ 😀

    Thank you,

  9. Balbir

    After learning that it is agent who gets benefited more (due to high commission paid by fund house) in the first three year. Just wondering how much a agent can get as a commission if one is paying ULIP premium of 1,00,000/- per annum ?

    Does agent get commission from every premium till the term of ULIP policy or just the initial three years or just during the PPT (Premium paying term) ? I am just curios and this info would help me as a point while suggesting my friends against ULIP ( who just joined the corporate world ).

    Thank you,

    • Balbir

      ULIP agent or Any Insurance Agent get his commision for every premium paid by Investor ,, in the initial year its high and later it goes down


  10. Arun

    Hello Manish,

    I am a recent visitor of your site. Your site is very interesting and very informative. I have taken ICICI Prudential Life Time Super and I have paid 20000 yearly for the past 3 years. Term – 10 years. Assured Amount – 5 Lakhs. Current value – 69970.

    Can I continue with this ULIP? Any suggestions.


    • So the return of ULIP in 3 yrs has been around 8% for you . If you can continue in this for long term . I would suggest go ahead and keep investing , make sure you take switching decision well ..

      If you dont want to get involved a lot , better get out of it and invest in MF systematically


      • Arun

        Thanks Manish for your suggestions

        Can you please provide an analysis on Birla Platinum plus III as they mentioned “HIGHEST Unit Price Recorded on any business days between May 15 2009 to August 16 2016″a and the agent was keen in making me buy this and informed that he has also invested in this plan.

        Policy Terms : 10 years
        Premium Paying Term : First 3 years only

        This sounds good, but is there any catch. what is the alternate and better option you suggest?


        • Arun

          I really cant look into details because of time limit , but there has to be some catch and hence , i would suggest , go with simpler things like SIP , Term etc ..

          “If you dont understand it , dont take it” is the rule :)


          • Akhil

            There is no catch in it… Well its platinium Plus IV has come after that and stop on 15 Dec 2009…. The funda behind this is that…they launched a new close ended fund called platinum plus iv with notional value of 10 like every fund start… since its life time of 7 year every day company will note down the nav.. if its higher than previous day it will be locked for you as gurrante….. This they will do continuously till 7 year achived and then what ever the highest NAV noted in between this period will be kept separate for you as guranted maturity amount… isn’t it nice :) it is… if you see the fund performance for platinum plus II you will really feel good about this… I would say better than plain mf’s anytime…

  11. Satish

    I have Kotak Safe investment ULIP for 7 year premium term and 3 years are completed.

    I thought to stop it start investing same amount in ELSS Mutual funds but came to know that if ULIP is stopped before 5 years, the tax benefits claimed earlier will be assumed “income from other source” and need to pay tax on same. if this is the case, the tax will be high for 30% bracket.

    Any suggestions? How to deal this situation?

  12. Satish

    Hi Manish,

    Below is one of link. I read in couple of websites. From below details, let me know If my understanding is not correct.


    Unit Linked Insurance Plan (ULIP)

    Be Ready To Pay Tax On Surrender of ULIP or Pension Plan !
    I had some Life Insurance Policies with SBI Life ( i)Under their Unit Linked Scheme (ii) Pension Scheme.After continuing for 3 years,I had to surrender the above policies as I needed money. Kindly advise me whether
    whether surrender value will be be added to current year’s income and taxable?
    whether the value of the Units/ Investments or Profit thereon,purchased by the Insurance Company out of my policy premium and now,sold for effecting my surrender request will be required to be shown separately / added to Income for computing Tax.
    Prabhat Dev Mondal , Patna

    Your question relates to two types of investments -ULIP and Pension . While the units of ULIP are capital assets under I T Act , pension is not considered capital asset. Therefore , their treatment under I T Act is different. But before you do that it should be seen -what are the schemes under which the people generally invest in these kinds of product.

    Investment under ULIP is eligible for deduction u/s 80C up to Rs 1 Lakh. Clause 5 of Section 80C states as under

    (5) Where, in any
    previous year, an assessee

    (i) …………

    (ii) terminates his participation in any
    unit-linked insurance plan referred to in clause (x) or clause (xi)
    of sub-section (2), by notice to that effect or where he ceases to participate
    by reason of failure to pay any contribution, by not reviving his participation, before contributions in respect of such participation have been
    paid for five years; or


    (a) no deduction shall be allowed to the assessee
    under sub-section (1) with reference to any of the sums, referred to in clauses(i), (x), (xi) and (xviii) of sub-section (2), paid in such previous year; and

    (b) the aggregate amount of the deductions of income so allowed in respect of the previous year or years preceding such previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

    In plain word, if the ULIP is terminated or ceased to be participated by assessee , all the deduction claimed till the year of termination or participation shall be treated as income of the year in which surrender or termination of participation was effected by the assessee.

    In your case , you surrendered the scheme within 3 years , therefore , aggregate deduction claimed till last year, will be added to your income as “income from other sources”.

    • Satish

      I will have to look on this . I am not sure .. But after 3 yrs what ever money you get , that will be tax free totally.. before that , i am my self not sure :)


      • Satish

        Hi Manish,
        see this article http://www.themoneyquest.com/2008/09/10-common-income-tax-fallacies.html
        I think it’s explained here in easy way.. and it’s saying there will be tax after 3 or 4 year. Is it correct?

        9. ULIPs can be surrendered after 3 or 4 years
        Of course, you can surrender them but there are tax consequences. It has been specifically mentioned in section 80C that in case of termination of ULIPs before 5 years, all the deductions claimed earlier will be treated as income of the year in which surrender or termination takes place. Therefore aggregate deduction claimed earlier u/s 80C on payment of ULIP premium will be treated as “income from other sources” and you will be liable to pay tax on it. For further details, please read Unravelling the Ulips: 5 Secrets You Should Know About

          • Hitesh

            This is actually shocking.
            I was about to discontinue my ULIP after 3 years, this would have definately led to disaster.
            Though i am confused in one point. The article states that you can make payment for 4th and 5 th year by making partial withdrawals in the ULIP.
            Please suggest how to do that.
            I have a KOTAK safe ULIP :-(

    • Its a regular ULIP from ICICI . Here are the features .

      • A regular premium Unit-linked endowment policy that offers potentially higher returns through the Multiplier Fund.
      • Option to choose from 7 different investment funds.
      • Systematic withdrawal of money from fourth year of Policy term.
      • Higher of the fund value and sum assured payable as death benefits.
      • Option to switch between funds up to 4 times a year, absolutely free.
      • Available with optional Waiver of premium Rider.
      • Tax benefits under Sections 80C, 80D and 10 (10D) of the Income Tax Act, 1961.

      So nothing differnet in this ULIP . If you want to buy ULIP only , there are better choices .


  13. naresh


  14. Balbir

    I see people has made there ULIP paid-up after 3 years. Just wanted to know whether I can use top-up facilities even after the policy has been paid-up.

    Thank you,

    • Balbir

      by making a ULIP paid-up , you mean that you the stopped paying the premium , correct ?

      You can use top up only if the policy is going on , so first you need to revive the policy :)


  15. raghu

    Hi Manish,

    What is fund switching. I have a ULIP icici prudential life time gold. When do you think it as a good idea to switch ?

    • Fund swithcing means to switch your money from one type of fund to another fund . So you can switch from a risky fund to a safer fund or vice versa .

      When is the good time ? . this is a tough question . this is something you need to learn by experience and if you have time and interest in Stock market , one needs to have knowledge for this , thats the reason ULIP is not suitbale for some one who is with less knowledge , interest and time :)


  16. balbir2997

    Hi Raghu,

    Manish has already mentioned this tips in one of the article, though it
    require to understand the market tendency, so it is all about interest
    and time. I, Myself is in the learning curve still.

    Switch to Equity : When Nifty PE goes above 16 after it has touched 12-13 .
    Switch to Debt : When NIfty PE goes down below 20 after it has touched 24-25

    Also when the NAV is all time LOW then use the top up facility and buy more units.

    Switching is useless facility when the investor do not know when and how to use it.

    This is one of my colleagues told me when I was offered another ULIP plan from
    my friend. I had to say him ‘NO’, it was tough but finally he understood.

    “When people make you fool you become intelligent”. Even in friendship agent
    are certainly not your friend if they force(emotionally, knowing you can not say NO)
    you to buy ULIP.

    Simply if you do not understand something then do not buy it. or you can’t understand it
    fully until you are in trap :)

    I took ULIP two years ago and neve cared to check units allocated to me, current NAV price
    and charges they were deducting. But now.. it is up to me how to play this game :)

    Thank you,

      • Durga

        i was not sure about the above conclusion i think it should be
        Switch to Equity : When Nifty PE goes BELOW 16 after it has touched 12-13 .
        Switch to Debt : When NIfty PE goes ABOVE 20 after it has touched 24-25

        I have a question about above switching, Do we need to consider NIFTY PE for any kind of ULIP’s? or Only ULIP’s which are invested in NIFTY?
        correct me if i am wrong.

        I got to know the below information from one of the blog.Can i use fund switching by taking below info.

        PE Ratio Equity Exposure % Debt Exposure %
        Below 13 90 – 100 0 – 10
        13 – 16 70 – 90 10 – 30
        16 – 20 50 – 70 30 – 50
        20 – 24 20 – 50 50 – 80
        Above 24 0 – 20 80 – 100

        • Durga

          We can use Nifty PE infomation to switch in ULIP , but this would mean switching at very low speed as these things happen in many years . What we need is a mechanism to switch within months or atleast 3-4 times a year .


  17. balbir2997

    Also, I am not sure if one can use fund switching when PPT(Premium Paying Term) has over or policy has been paid-up. I need to check with the customer care guy.

    Why I want to know because once the policy has been paid-up and just before the maturity if market crashed and going down, then there would be no point to withdraw the money with low NAV price, I could use fund switching and move my units to debt.

    Thank you,

    • Correct .. please check and let everyone know .. I would recommend that at the time of goal , better start withdrawing your money before 3-4 yrs in systematic way .. let SIP concept apply there also .


  18. Balbir

    Hi Manish,

    I checked with my agent/customer care guy [LIC and HDFC] and they confirmed that switching would be applicable for the paid-up policy. But I would confirm from the branch once I get time to visit there branch.

    I have one concern on your statement from http://www.jagoinvestor.com/2008/06/things-you-didnt-knew-there-are-many.html

    ULIPS : The deductions availed under sec 80C is taken back if you surrender your ULIP before 5 yrs. If you surrender your policy in 4th or 5th year , then all hte premium paid till date will be added to your salary for that current year and you will have to pay tax on that too. ULIPS just put restriction on paying of premium fr the first 3 yrs, but offer tax benefit under 80C if you hold it for minimum 5 yrs

    Is above statement is true?? do we have to pay tax on the earning from ULIP also?

    Thank you,

    • Balbir

      yes , that seems to be correct thing about ULIP . I am still investigating the fact, but i have read this at some places and looks like its true . Still needs to be confirmed .

  19. madhu

    hi manish
    i took the policy in kotk ‘kotak flexi plan’.in this plan i have to pay RS 50000/y.till now i paid one year. i have to pay another 2 years.but due to some reason i am not able to pay.so i amm thinking to stop pay to premium.at this point what will happened first year premium.

    thanks & regards
    M.V.Madhu sudhana reddy

      • oops .. I some how missed this one :)

        So as I said in this same article , you should see your policy documents (see on their site) and find out what do they say for premium stopped before 3 yrs. Generally you will your policy will be stopped but your units will keep moving as per market movements and then at the end of 3 yrs , you can then take your money . But check the policy details .


  20. Akhil

    Being myself one of those of so called advisor… I would like to clear this point here… yes you can stop paying premium after after first year… Once you stop paying the premium before first three year… your invested amount pulled out from investment mode and put in to suspence account and that will be hand it back to client once 3 year period over but… but having said that , you don’t have to forget most companies charge heavy penalty name of surrender charges which eat 80% of invested amount if you stop the premium in first three year. So my adivce to all of you investor is that don’t be panic and act stupidly or make hasty decession, like one you make before entering contract with company for ULIP.

    • Akhil

      Thanks for your comment . Do all the companies put 80% as surrender charges ? Realllly ? I was looking at a friends ULIP policy from HDFC and it did not mention anything like that , Did we forget to check something ? Please let us know ?


      • Akhil

        Yes Manish.. most of the companies charge this charges… 80% can’t generalise, but yes charges are there… if you want to check see first three year your surrender value and fund value is never be same in illustration…. only after three years or now irda make 5 years minimum time to remain invested in ulip… After said period both surrender value and fund value would appear same.. it means surrender charges are not applicable after that point.

          • Akhil

            No lock in period is still 3 year… But plan can not be surrender before 5 year…

            Understand like this.. I am investing 1000 rs pa in ulip.
            I have to continuously pay this amount for 3 year before i can touch part of my money or start taking withdrawal out of my fund value limit to one policy premium should be kept in my account. if i withdraw full amount then its will be charged because it consider as policy surrender.

            • Akhil

              But when I see the policy documents of ULIP’s , there are rules for surrendering the policy (stopping the premiums) before 3 yrs ? What about that ?


      • Akhil

        I just refer to one plan which is hdfc endowment plus… this particular plan charges 100% if you stop after first year premium :) so definitely manish you forget to read something :)

  21. Akhil

    HI All,

    One who already invested in ULIP and one who are new but looking avenue for investment and under impression ULIP is like big bad evil… who eat all your hard earn money… Like my suggestion to all my client… Few thing you should notice before entering in ULIP, Like manish also mention so many time earlier topics…

    1) Your horizon should be very well clear. If you entering ULIP, it is long term plan where if not atleast 10 year plus should be your goal… If anybody looking ulip with horizon of 5 year please this is not for you. Invest in mutual funds/ ElSS if tax saving is your concern.

    2) ULIP is one product which is really good if you invest continuesly and for long term. if you see the total charges through out the period/term.. comes close to 2.5% and if you do some little exercise you dig out few plans in ulip which charge around 1.8% in total…

    3) ULIP is comparatively Flexible product compare to ELSS because you have power to switch fund from equity to debt and safeguard your corpus, which is not possible in last… Also many company’s offer life cycle option now a days which manage the ratio of equity and debt automatically and switch your fund every year….

    4) Last my point is ULIP is not the end of your investment… its one more available option which you can include in your portfolio like other avenue of investment… FD, Mf’s/ELSS, ppf, bonds.. etc…

    I believe manish also agree with me.. most of the financial expert suggest one long term plan to be incorporated in your portfolio…But if you as an investor really aware and understand the product before commit you will find yourself more comfortable and make a most out of it….

    So what you can do is keep reading this blog from Manish.. because I personally find this one very useful… Thanks Manish :)


    • Akhil

      Nice points from your side ..Good one . Lets discuss 2nd point a little more . Given that MF’s can be bought without load now , dont you think it would not be good idea for someone to invest in MF only rather than ULIP (I am talking about those who dont do switches m, who are lazy) .

      I agree with you that ULIP’s can be very amazing products if one has some market idea and can take good switching decisions :) . Thanks for your contribution :)


      • Akhil

        Well Manish… keep charges aside for a moment… I would like to counter MF by point which I taken out from your one case study… where you prove person who start with 100% equity and second with ratio of 70:30.. at the end of term person who started with mixture will do better over first person :) so if tax benefits is your concern and you believe this case study you know ULIP is good over MF.

        But if you not doing tax planning but wanted to invest then MF is better option.. but you know debt fund attract flat tax of 20% or 10% without indexation, on the proceeding.. and if you go toward growth fund you again exposed to high risk of market. which for mid term is okay but you can not hang with mf for long term because you don’t know if last moment market volatility might do the money erosion…. which would harm your fund value badly…

        LOL ULIP is winning so far.. let see what more point we can explore. :) :)

        Now a Days plan in ULIP offers you auto switch facility or dynamic floor fund.. which 100% manage by the fund manager and ratio of equity and debt control automatically, so if you lazy also you have an option in ULIP.

        Charges:- MF is the winner :) hehe I don’t want to comment… okay okay on serious note..

        Before we start, you as an individual should know in this world nothing come for free… if company is doing all this thing to provide you peace of mind… they are entitled to charge you also or they not.. :)

        If mf loads will be taken off then also recurring charges 2.5% will be there…. which includes fmc and admin charges just like in ulip.
        ULIP is quite costly if you see the charges of first three years to 5 years.. but once you came out this period charges falls to extent which limit them to 2.25% ithrough out the term. (changes according to plan features).

        Conclusion: I kept it rest till you not complete the picture then we do the conclusion :)

  22. Akhil

    Hi Balbir,

    No as far as I know working in same industry…. if you stop your premium payment before three year, you will not be charged for tax. because locking period still there for your paid up amount which is 3 year. And 4 and 5 th year if you stop paying the premium, company will charge you surrender charges… After 5 year onward you found fund value and surrender benefits are same means there is not exit load After 5 year onward…. Again not all the companies charge you on 4 and 5 year… its depends on plan features.

    • Akhil

      I also read somewhere that “ULIPS : The deductions availed under sec 80C is taken back if you surrender your ULIP before 5 yrs. If you surrender your policy in 4th or 5th year , then all hte premium paid till date will be added to your salary for that current year and you will have to pay tax on that too. ULIPS just put restriction on paying of premium fr the first 3 yrs, but offer tax benefit under 80C if you hold it for minimum 5 yrs”

      I am not confirmed , but can you recheck this and confirm ?


      • Akhil

        Sure this interesting point, me to curious because as far as I know this point is not communicate to us… As you know IRDA done some changes in guideline that’s the reason all the companies force to change there existing plan to new….. one Change is that IRDA Put cap of 3% on charges… no company can charges beyond said limit…. so i am not surprise If that point, what you just mention also incorporated… because if you see 75-90% (rough idea) people withdraw from this plan post three years….

        I always believe the enemy of ULIP is no body, but stupid companies policies and bad presentation skills. This plan is highly miscommunicated and that’s the main problem with it.

  23. Akhil

    Any how Pension Plan and ULIP are different in sense of tax treatment…. So my above comment is purely with regards of ulip… Am also not so sure about pension plan…. All I know at the vesting period only 1/3 part of your corpus is tax free which you take out as lump sum.For rest amount you have to purchase annuity from same or any other insurer which again treated as your income and you have to pay tax on that amount.

    • Akhil

      If you closely look you will realise that 100% of your money is tax free at maturity (Sec 10) . Just that you have to pay tax on yearly income on the annuity , which is totally acceptable because its income for that particular year . with pension plans imagine , you get all your money at the end , you keep 1/3rd amount , dont pay tax on that and for rest 2/3rd also dont pay tax , but then invest it in an annuity plan . So overall there is no tax on 100% part . Just that you can take 1/3rd with you :)


      • Akhil

        hmm how come.. manish try again… 1/3 part of your corpus you took lump sump as tax free.. but rest of the amount you have to purchase annuity which attract tax you can’t save tax on that…its treated as your income…

  24. vinod

    Hi manish, i have invested in ulip of canaraHSBC , and it was done very quickly by the agent as i had to leave india within next 4days.
    My query is ” if i stop my next premiums (2nd,3rd,4th and 5th yrs) what money will be refundable of my total money invested in the first year?
    As i was away out at high seas could not do anything for stopping it in its initial 15 days trial offer, do i stand any chance to present a case for refund to IRDA?
    kindly advice

  25. Akhil

    HI Manish,

    Sorry I am interrupting again, since you asked this from manish.. But I would suggest not to stop because you don’t have any chance and more over… the investment added back to your income and you have to pay tax on that…..apart from that company deduct surrender charges and rest of the amount will be handed back to you after said period of 3 years.

    Yes manish, I took a confirmation….. If you stop paying your premium any time between 3 years of locking period, your investment added back to you income in subsequent year, which year you stop paying the due premium and total paid up premium will added back to that year income and you will be tax on that… not applicable on 4 year onward only first 3 year premium….

  26. Unhappy

    Hello all ! I am in serious trouble because of ULIPs. 3 years ago, my father bought units worth Rs. 50,000 from ING Vysya. We were looking forward to them maturing last month, but when I went to their office, they told me the following things –

    1. The fund value is Rs. 45,000.

    2. They said that as my father paid only one installment, we cannot have the money back for another 2 years (total 5 years lock-in).

    3. I said what is the guarantee that the fund will perform in the next 2 years considering its abysmal performance. They said no gurantees, but they assured me that they have deducted their annual maintenance charges and this is why the amount is low, other wise it would be around Rs. 48,000. Some reassurance.

    I just want my money back because I do not trust this company one bit. Is there any way we can get it ?

    • Unhappy

      Sad , but the issue is you cant do anything . Even though you are unhappy and unsatisfied with this company , You have to take some blame on yourself that you never bothered to read the policy document and never took effort to understand the product where you are investing in .

      Policy document will have all the things clearly mentioned and Had you given 30 min while you bought it , you could have saved all this trouble .

      The company is correct in whatever they said , even though unethical upto some extent . Take this as a learning experience .

      Incase you are optimistic about the future (2 yrs) and feel that the markets will perform , better leave your money in equity option .otherwise you can do 2 things

      1. Switch everything to debt , this will not make you much returns , but will save your money from falldown .
      2. Ask them to liquidate your money and give to you after 2 yrs ( check their rules)

      No matter what , you are in mess just like lacs of other investors who took things for granted :( . I feel helpless :(


  27. Mukul

    Very valuable information on ULIPs. You are doing a great job on educating people.I dont know where to put this comment, so I am posting it here:

    1. The retirement planning article is awesome. When i told my dad abt 2.9 crores corpus @ time of retirement, he was dumbstruck. It told me that I need to be more aware of investment options and suitable vehicles to drive me safe to the said corpus in 20-25 years from now.
    2. The gold ETFs, had never heard of it. Now i am thinking on getting some investment in this.
    3. The ulip information was very helpful and can guide my family on same.
    4. the article on – want to take a risk vs afford to take a risk. pinching. to say the least.i
    calculated exactly how much i can afford to risk and started investment accordingly.
    5. SIP taught that they can inculcate good discipline and one need not tiem the market.
    6. Taught me PPF to say the least!!!

    How ever i have one question; i knw few trustworthy local co-op banks which give 10-12% per year.shall i go for this or debt funds?

  28. Harish Shrimali

    I have taken MONEY PLUS policy from LIC of India on Feb. 2007 (ULIP), and paid 2nd. year annual premium also. I am not deposited 3rd. year’s premium . Please tell me what’s the present status of my such policy.

    Please Help me.

  29. Rachna

    I have paid Rs 1,00,000 as my premium for LIC UNIT PLUS-II REGULAR.
    My 3 yr tenure is getting over in june2010.

    Could you please advise
    1.) should i continue paying my 24k premium for 8 yrs to avoid any loss or is it beneficial to terminate the policy after 3 yrs with loss of 1%.
    2.) Can i stop paying anuual premium after 3 yrs and continue the ULIP for 20 yrs. In such case would it be beneficial or loss.

    Kindly advise.



    • Rachna

      As we talked in this article , ULIPs is something you should stop immediately if you dont understand it , you cant take care of switching effectively :)

      1. Dont see the loss you are getting right now , see what is the profit you will make by stopping the policy .
      2. It wont be much beneficial , because anyways different charges will be cut by cancellation of units .



  30. :)

    Hello Manish,

    I was surfing net to get more info on ULIPs and its terms & conditions, and found your blog here…u r really doing a gr8 job by helping so many people lost in the world of investments !!
    So point is I need ur advice…I bought a ULIP of ICICI Pru – Life Time Super in 2007 for a term of 20 years. I paid the premium of Rs 30000 per yr till 2009 and now this yr was thinking to not to pay it further, I called their Customer Care and got to know that If I opt not to pay from this yr, the policy will be closed after 2 yr from now and the amount will be trsfd to me, another option he suggested was to pay the mortality charges (deducted thru my units) in which case my policy will be continued till the time I pay these charges. As of today the fund value I have is Rs. 1,11,000.
    Kindly advice if I should continue paying the premium for this year and for coming years as well…? Or should I opt for this mortality charges option.
    Also I shall be thankful if you can throw some light on the allocation charges…I guess first yr it was 20%, in second yr 7.5%, in third yr 4%, in fourth yr ?, and later ?

  31. Girish

    Hi Manish,

    In 2007 I took Lic money plus enrolled for 5 years premium payment and 3 years have paid the premium. The policy says, it is a 5 year term. The progress of money plus is not good and I do not want to continue paying premium for the remaining 2 years. Can you suggest me
    1. what is this 5 year term ? Is this the locking period !
    2. If suppose i discontinue paying the premium, after 5 years, on what NAV i will get the
    money back?

  32. Unhappy

    Manish, thank you for your kind reply. Yes, I am stuck and am arranging funds from somewhere else, however the person who sold me this ULIP is a personal friend, and he offered to loan me the full amount of the policy as he himself was not told about the 5 year lock-in. I am going to be very wary of these companies from now on.

  33. ds negi

    Dear Manish

    Please advice on following:-
    I am the holder of policy, money plus since mar 2007. I have paid two instlments in 07, 08 total worth Rs. 20000/-. Now three yrs being completed in 20 Mar 2010. Please advice me how i will get. I have not been allotted any units. Agent are saying that i will get 17000/- only out of 20000 which i have invested. Please advice at an early date. Positve and early reoply is solicted plz

    • ds Negi

      I can do an early reply (just 10-15 min if you see) but what is Positive Reply ? what do you mean by that ?

      So the thing , your money 20000 was invested for 2 yrs , but the ups and downs in market has not taken your money to anywhere … its almost at same place where is was , just that the costs in initial years have eaten away some 3-4k and your current value is 17,000 , if you surrender it now , you will get money after 1-2 yrs (see your policy docs) .

      Best thing would be to stop it if you dont understand how to take advantage of switching in the best way .


  34. Suresh

    Dear Manish,

    I have taken HDFC Young star champion policy in 2009 with premium of Rs. 50000 p.a. for 5 yrs. Can you pls. suggest as to how is the performance of this scheme and should I continue to pay premium for 5 yrs.


    • Suresh

      You should look at the ULIP NAV to find out the performance of the fund . without understanding your overall situation its not possible to comment on wheather you should continue this or not


      • PRAMOD

        Hi Manish,
        Can you pl guide me? I have taken a ULIP policy with ICICI for 15lacs for 15years premium being 25k pa. I’ve already paid 3 years premium so far and fund value as on date is just 83k. Now after reading your comments on ULIPS and Term policy, i am planning to discontinue the same and take a term plan may be iprotect. Further, i have taken jeevan Anand (SI 3lacs, premium 24k pa, 12 years) for which i have paid 3 years premium, however i intend to continue this policy. pl advise.

        Thanks in advance.

        • Pramod

          Your ULIPs value is low because of the charges mainly , it might do better in future , you have paid most of the charges anyways , you continuing it would be ok provided you are ready to learn how to use ULIPS .

          Regarding your LIC policy you do the maths yourself that if you continue it what happens and if you stop it and use future premiums in something else what happens then .


  35. sanjay goswami

    Hi Manish, I am an avid reader of ur blog. please review LIC pension plus.I am going to buy this plan.My age is 27yrs.Is it a good plan for me.Pls help me out.

  36. midlaj

    Hi Manish,

    I’ve a query. I had taken a Prudential fund (Life time insurance super) from ICICI Bank Bahrain and had made initial payment of Rs.50,000/- . But due to unforseen circumstances I could not continue paying the premium. The policy was taken in Feb 2007. Now is it possible for me to get my money back. I didnt paid continue one year.

    Please clarify.


  37. Anil Kumar


    I purcahsed a ICICI ULIP Life time Super in Aug 2007 and the current fund value is 220000..I’m still continuing the premiums (Monthly)…is this advisable?? When can I take this amount out??

  38. SK patil

    Hi, manish, i want some info, since i have invested in ULIP as fallow
    1. Rs 2000 monthly- BSLI dream plan from October 2009
    2. Rs 1500 monthly – BSLI dream plan from December 2009
    3. Rs 1500 monthly – BSLI dream plan from December 2009
    Now i am finding no growth on my investments so far made on ULIPs, and i am thinking that above 5000rs i want invest in good MFs (open ended) for SIP for 1year or more

    if i stop the making premium before 3years completion, do i get back the money whatever so far i have paid the premium after 3years pls. confirm, it will be great help and relief for me.
    IF YES, pls. suggest me any good MFs straightaway i will invest in MFs.

    Thanks Shivakumar

  39. Pijush Roy Choudhury

    Now a days United Bank Of India is giving 9.75% interest for 8-10 years duration Fixed Deposit. What oters banks are giving? Where to invest best for a senior citizen at present?

  40. Syamala

    Hi Manish,
    Good to read so many facts on the ULIP. We have SBI Unit Plus – 2 regular ULIP since June 2007 opted for my mother age 50. We have already paid for 4 yrs and we are not very good in tracking market or doing the switch aptly. This is the only insurance / investment plan they have and both my parents are not having any other investments on their name. Is it wise to continue this plan further? If we discontinue it now or after the fifth yr, what would be the charges? Considering their age can you please suggest some good investments plans for them if this is not the apt one.

  41. Phani Kumar

    i have paid LIC Money plus policy 20000 for 4 years (2007,08,09,10) but my agents said that pay for fifth year also, so is it worth to pay money plus for fifth year also. i came to know that the nav value is very less even we are not getting what we invest also so far.
    please suggest me to pay for fifth year also

  42. Amit

    I have taken ICICI Life time super in 2007 & paid Premium for first 2 years, but couldnt paid the 3rd & 4th year preimium, now after 2.5 years I want to pay the 3rd & 4th year premium, so is it possible

  43. Syed

    Hi Manish,

    I have invested 3 years(25000*3) in HDFC ULIP . Now I checked my fund value is 48000 only. They deducted service charge and as well as monthly charges.

    I am thinking may be its more worst in future .Should I continue this plan or I have to withdraw ?..

    Will it profit in long terms ?.
    Please suggest me ASAP.

  44. Fayaz

    Hi Manish,

    I have invested Rs 36,000 per year in Kotak ULIP and now the fund value is 45,000. I am very much worried by looking into the amount. I have completed the lock in period of 3 yrs , what can i do now as ULIP is not returning the atleast amount which I invested i.e 1 lac…

    Please suggest me what to do , as its a huge loss.

    • Fayaz

      Better get out of it .. wanting to get back what you invested is a psychological block in mind , nothing else .. if you have to wait for 10 yrs to get back your money , then will you wait it ?

      No , it does not make sense.. better get out and forget the past


  45. sanjay

    I have a HDFC Standard UL Endowment Suvidha Plus policy from Feb 2007 with premium amount as Rs. 1 Lac annually. The current value of the policy stands at Rs. 5.89 lacs after five years. The total term of the policy is ten years. I would like your advice whether it is beneficial to keep paying the premium amount for the next five years or to discontinue paying now since I have already paid for five years.

  46. kanwar

    Dear Manish,

    I need your help..I have an ULIP plan of HDFC, my monthly premium is Rs. 10 K , anually it is Rs. 1,20,000 per year.

    I have paid for 2years 9 months ( I have paid Rs. 3,30,000 till now ) but the fund value accumalated into my account is just Rs. 2,10,000. I am very depressed, And the policy says you have to pay upto 2034 and the minimum till 5 years.

    If I withdraw before 5 years – let say 2 years before – the loss would be 15% less of my accumalated money i.e Rs. 2,10,000
    If I withdraw 3 years before (i.e 5years) then my will get my ammount = 35% less than the accumalated value (Rs. 2,10,000). In both the case I incurr a huge loss, more an a Rs. 1,50,000 compared to what I have invested.

    3 months premium is still due to complete 3 years. I do not know what to do.. How to cover up my loss. At the time of buying, the agent told me that, you need to pay only for 3 years and then allow it to mature untill 2034. He never mentioned me, that you need to pay till 2034 years.

    Please suggest me, I need your help very badly.. I can even talk to you if you provide me your number. I am in very bad shape.

    • Kanwar

      You are victim of mis-buying (you can call it misselling) . All the ULIP’s earliar came with 3 yrs lock in , what you agent said is that you cant not take your money out before 3 yrs, no matter what, but what he didnt tell you is that even in 4th and 5th yr you will be charged a surrender charge (its in all the ULIPs) , but you are free to take out the money if you want. Its not compulsory to pay upto 2034 , it must be mentioned because you took at 20 or 25 yrs policy.

      Now coming to the point, what ever you do , you case is in black and white and you have already mentioned everything, one point I would say is that due to heavy costs and bad market performance (not exactly your fund ,because ultimately its dependent on the market), your fund value is less, which is case with almost anyone who invested around 2008-2009 .

      Now let me know advice you need exactly ? You can pay for 3 more months and then you will two options , either take your money back (15% surrender charges) or let it grow for next 2 yrs , after than you will get 100% of your fund Value !

      Did you ever read your policy document to understand what exactly are terms and conditions and what are charges of this ULIP ? Obviously not . you must have found out these things before buying something , not after wards !


      • kanwar

        Thanks very much Manish for your prompt advise.

        Actually, its only 3 months ( i.e June, 2012 ) for me to complete 3 years tenure of premium paying. So the doubt which is creeping me in is whether I need to pay the premiums per month until only 3 years and then stop paying. And as you conveyed me that, I would have taken this policy between age 21 to 25 years (which you are absolutely right) so they would have mentioned upto 2034 paying premium and I need not to pay any premium beyond 3 years i.e after June 2012.

        Actually I was in a need to withdraw the money accumulated ( right now which is – Rs. 2,10,000 ) for a critical reason in 2013 August. So do you advise me to me finish the 3 years tenure until June – 2012, stop paying the premium. And wait for the fund to grow for the next one year till July 2013 and the then withdraw the fund after the fourth year August 2013 by paying surrender charges( which is applicable when withdrawn between 4th and 5th year – i.e 5%). Would wait for your kind advise to act.


        • Kanwar

          Let me tell you points which will help you to understand it .

          1. You can stop paying the premium after total 3 yrs, but thats just an option , that option is not going to help you ,because even after 3 yrs when you let the policy run, there will be COSTS like mortality charges (for life insruance) , Premium Allocation charges (if any , check your policy), management charges (generally Rs 60 per month or some amount per month, irrespective of the Premium and SA) + MORE 😉 . Now these costs will be recovered by CANCELLATION OF your units . So if you continuing the ULIP, the fund will see the downside from these costs.

          2. Next point is that if you surrender the policy before completion of 5 yrs , generally the ULIP;s have surrender charges , 3 yrs lock in is different thing , now you have FREEDOM to take back the money but at cost ! . check the exact percentages in your policy document for god sake for the first time in life 😉 . Just some sarcasm !

          3. Your fund value might go more down if markets dont do well , so if you want it to not have any co-relation with the markets, switch the money to DEBT from equity , but thats purely your choice based on how you see next 2 yrs .

          4. I see things from MAKING LIFE SIMPLE point of view , not just returns etc. so If I were you, i would have got out after 3 yrs, paid surrender charges if it was less than 5% and felt the sense of FREEDOM and then thought , what to do next now – with more informed decisions :)



    I had a ICICI ULIP policy,starte on May’2008 and paid upto feb’2010 i.e upto 22 months.In March 2012 ICICI foreclosed my policy and deduct 75% of fund value and send me a check of the balance.Though this was mentioned in the terms and condition [which I watch after this misshapen],but as per IRDA regulation of standardisation of ULIP policy-2010 ,surender charge is 12.5% of Fund value,and this regulatin is also applicable for existing policy [as mentioned in clause1,paraII],but several time I communicate but they refer only T&C…………..If it is legally correct then I have no worry,but if illegal then what I can do now ……………also want to know wether ICICI is doing illegal deduction or I am wrong ?????????????


        But as written in clause 1,para 2 that “They shall come into force on the date of their publication in the Official Gazettee and shall apply to all contract of Linked Life Insurance affected thereafter. These regulations supercede the provisions of circular/ guidelines if any issued by the Authority and will be applicable to the existing products also.” in IRDA(Standardization of terms & conditions of ULIP Products and treatment of lapsed policies) REGULATIONS, 2010

        • That means that it will be applicable to policies which will come from this point in time , but the product per se exists . Means if a product ABC was there , then it will be applicable to all the policies of ABC which come now !

  48. san

    Hi Manish,

    My father taken SBI Life Insurance Horizon Plan -II live cover on Risk date is Jan 2009 & paid Premium Rs. 12000/ each for(2009,2010,2011,2012). FUP date is 07.01.2013, mutarity date is 07.01.2024 term 15 year. what is this 15 year term ?
    can i stop paid premium amount after 5 years, and discontinue than, what amount i wil get it.

  49. Rajvin dias

    Dear sir i have a tata aig invest assure lic plan (2007), initially they told me that for 3 yrs i have to pay my premiums and leave it, i payed for 4 yrs and stopped, now they say that rules are changed and 5yrs payment is compulsary , is it true???

    • I dont think so .. that is rule for new policies .. if you have taken if before change of rule , then you can stop the payment after 3 yrs .. but if you want to take out the money before 5 yrs , there would be some charges as per even old rules ../ check your brochure and policy document and everything written will be followed for you

  50. Makul

    Hello manish,
    I have taken a ULIP plan of tata aig life (invest assure flexi) in feb 2011. i have invested 75000 in it. now at this moment i want to surrender the policy. but the condition is that my money will come after lookin period. i want to ask my policy is showing 67769 as a fund value and 65521 as a surrender value. it means after lockin period i will get my surrender value or some charges will again be deducted from surrender value also.

  51. Jai

    Hi Manish,
    I took a ULIP life insurance policy from Bajajallianze during 2008. The payment mode is annual and i paid two premiums for 2008 and 2009. After that i did not pay, and the policy became lapsed. Is there any way to get back my amount (12000+12000). When i contacted the customer care, they said, the policy is lapsed and cannot be closed. I have to pay the pending amount for 2010, 2011 and 2012, to activate the policy. Then only I can close it. Please advice.

  52. Hardev singh

    Hi Manish

    I have bajaj Allianz ( Cash gain Economy endowment plan ) and I have paid my first premium in apr 2012. Now I do not want to continue it further.
    1) Can I get my account closed and what will happen if it is closed ?
    2) Till date I have paid only single premium and if I do not pay next 2nd and 3rd year’s premium then what will happen and get it closed after 3 years?

  53. Prasanna

    Hi Manish,

    I have taken LIC Money Plus -1 ulip policy on Jan 11th 2010.Its on a quarterly basis and i have paid 11 premiums from 2010,one more premium to go and will complete 3 yrs On jan 11th 2013.Now in the website i read that i can surrender my policy after 3 yrs of premuim yeras but when i check with the agents here they tell me that i need to wait for 5 yrs to complete.And i dont want to keep this policy with me and wanted to surrender it very badly.Could you please clarify .

    Thanks for your help.

      • Prasanna

        Thanks for your quick response.

        The agent said that as i have taken the policy in 2010, the minimum years to retain it is 5, could you please tell me from when they have made it as 5 yrs

          • Prasanna

            I have taken it on Jan 11th 2012,so i can surrender it after jan 11th 2013 right???Please confirm..

            Thanks a lot for your help…..

            • In that case the lock in will be 5 yrs , that means you can get your money only after 2017 now , because of lock in , you can stop paying the premium, but you will not get the money right now , check your policy document on rules if you want to discontinue before 5 yrs !

              You took things very lightly and over trusted others with your money , never do that ..

                • Prasanna

                  Thanks…I have blindly trusted the agent and the time when i took the policy i don’t have any idea on these policies and i didnot even try taking suggestions from people…The agent said that i will get double of the money .i just thought of saving some money and invested on this,and now i am suffering a lot….

                  • Prasanna

                    I will assume that you can link things in a common sense way . Money doubling in 3 yrs , means more than 20-25% compounded returns , Banks give 8-10% . If those products really could double your money in 3 yrs, wont all the banks and indian billionaire’s put all their wealth and double their money in 3 yrs . It was just not possible :)

  54. Dipesh

    Hi Manish,

    I have taken kotal smart advantage ULIP. annual premium 20000 on 25th december 2009. I have paid 2 premiums and policy is for 10 years. Aftet two years NAV is 36000. What should I do with this ULIP>


  55. raj


    Thanks for the information guys ! :)
    Now i have situation here, this is for Mutual funds, i am investing HDFC tax saver mutual funds since 16 months and now i want to discontinue the investment. when i inquired about the redemtion of NAV’ my agent told me i need to wait till 3 years to be completed.
    is it mean that i will not be able to get my money till i complete 3 years? and if i stop now, afetr 3 years i will get only the amount which i invetsed !
    kinldy somebody help me in this :(
    My mail id is basu.rodagi@gmail.com


    • Its a tax saver fund with 3 yrs lock period , so obviously you cant get it before, how come you dont know this, its your money right !

      You will get the market value after 3 yrs, whatever it is !

  56. Arupa Nath

    Hi Manish,


    I have an LIC Market Plus -I policy (Secured fund) from August 2010. It was for a period of 3 years and the premium (Rs.9000) was to be paid every month. However, due to some house construction expenses I have not been able to pay the premium for the last 4 months. I don’t think i will be able to pay the premium for quite a few months. Will i get the money back after 3 years if i stop making the premium payments? What would be the penalty? Should i surrender the policy or stop making the payments?

    • I think you should read the policy and see what is the wordings/rule for stopping the premium before 3 yrs. If you have taken it long back then, there will be a provision to get your money after 3 yrs, but if you took it recently then there will be issues with stopping your premium , I suggest discuss it at length here – http://www.jagoinvestor.com/forum/

  57. Hrudananda BIswal

    Hi Manish,

    I have taken a ULIP policy (HDFC SL ProGrowth Super II) of 50,ooo/- from HDFC which has a locking period of 5 years. After 1 year I am seeing my fund value is far less than, what I have invested. So I am little worried, whether I shall continue with this policy.

    I have spoke to the agent, he is saying to continue the policy at least for 3 years.(I doubt to get his bonus he is saying like that).

    I am aware that If I discontinue the policy, I need to pay the surrender charge.

    Will I get my current NAV, if I surrender now, or the company will deduct some other charges as well? And most importantly is that amount taxable?

    And finally is it a better idea to bear the loss to close the policy and invest in a risk free policy, where I can get tax saving under 80 C as well as 8-9 % return ?

    Any help will be appreciated.

    Thanks in advance.

    • There must be very high premium allocation charges which you didnt knew . Coming to point, you can redeem your funds only after 3 yr of lock in , Funds will be redeemed at NAV and then you will be paid after removing the surrender charges .


  58. Nagesh

    Hi sir,

    I have taken HDFC ulip policy 5 years back and now its value is less than what I have paid.
    If I with draw , will that amount is taxable and will thay charge anything(5 yrs lock in perod).


  59. nitin

    hi Sir I am Nitin Karbhari, I purchase LIC policy 20/11/2006 premium 1646 quterly (money ack policy 20 year) i stoped policy on 20/11/2008, will i get my money back, yes or no, if yes what is the process of that to get my money.

  60. Rabi

    Hi Manish,
    My father has bought two max life insurance -Life maker gold (ULIP) growth plan on 27.02.2008, we have paid only two premiums of 2008 and 2009 with annual premium of Rs.20000 and 30000 respectively. Now the policies are on lapse mode and are going to terminate on 27 Feb 2013. According to the company customer care executive if the policies terminate we will not get any money as three years premium has not been paid.
    In the policy document it is written that
    Discontinuance of due premiums within three years of inception of the policy:
    In case the contract is not revived during this period, the contract shall be terminated and the surrender value, if any, shall be paid at the end of third policy anniversary or at the end of the period allowed for revival whichever is later.
    However, under another clause it is written that the policy will acquire surrender value if three ATPs have been paid.
    Any suggestions? How to deal this situation?

    • Sanhita

      I was reading your query and that is exactly what has happened with me and max…however you are lucky if u have paid 2 complete ATP’s in case of 5 pay contract. in case it is Regular pay or 10 pay or 15 pay contract, then u would need to pay 3 annual premiums. Please read Clause ‘ Surrender’.
      Since my policy is 5 pay, max is forcing me to pay 5 years premium. However, the clause surrender says i need to have completed only 2 ATP’s. as u have enrolled the policy prior 2010, then the IRDA regulation says that u can stop after payment of 3 ATP’s. there are also clauses which mentions discontinuance funds etc.
      I suggest you read the regulations of IRDA and the policy document very carefully and approach IRDA (not the greivance cell), the main office to check which part of the IRDA Act supercedes the clauses of the policy document

  61. Vibhor

    Hi Manish,

    I had purchased ICICI pru Life time super (ULIP) policy in 2007 & paid full premium till 3 years, the lock-in period was 5 years – which is complete now.
    My investment has grown by 16% till date & I wish to withdraw the amount – What would be the charges deducted (fund mgmt charges,policy admin charge etc)?



  63. Bijesh


    I took a Kotak Flexi Plan II policy on 23/02/2008 and its completing 5 yrs coming february and i have paid the ECS without any lapse. I am planning to withdraw the policy after february. Will there be any surrender charge for this?

  64. Biswajit

    Hi Manish,
    I have taken a policy from Aviva Life Saver Plus in 2009 and paid 4 premium of 20K (total amount paid: 80k). Now if I stop paying premium but want to retain the policy active so that I can withdraw the money after couple of years at market NAV at that point of time.
    Can you please suggest the best possible ways so that I get benefited.

  65. Prasanna

    Hi Manish,

    I have an lic money plus-1(193) policy which i took in jan 2010.i have paid the premiums for three years.i dont want to pay any more and then decided to surrender as i can do it after 3 yrs.Now when i see the NAV, and calculate the return i get from nav and units , its 20000 less than what i paid as premiums…could you please suggest on this.

  66. Sankar

    I was surprised when my advisor who asked me to take SBI life insurance policies 3 years back suddenly asked me to surrender them and put the money in something else from SBI. This would immediately put me in loss. The policies are SBI Life Unit plus III (1 Lakh/annum for 15 years) and unit plus III pension (50000/annum). 3 premiums have been paid already. I now want to stop these and go for MFs. I was wondering what is the best option, Surrendering or make it paid up by stopping premium payment? Thanks a lot in advance for your valuable suggestions.

  67. Krishna

    Hi Manish,
    You seem to be the best advisor around. I’d really appreciate if you could advise me.
    I had taken a Canara HSBC Life Unit Linked Whole Life Plan from 15th oct 2009 with a installment premium amount of Rs.3,00,000 p.a. I was misguided by my banks personal manager on who’s advice I went in for this policy. After realising my mistake ,I paid the premiums for 3 years (until 15th Oct 2011). I gave a written application for “Auto Cover Continuance” in April 2012. I didnt pay the premium in Oct 2012.
    What I want to know is that when can I safely withdraw the money from this plan because I need the money to invest elsewhere. As per me, I should be able to withdraw after 15th Oct 2013…but I’d be very grateful if you could confirm the same? If I withdraw any time after 15th Oct 2013…will there be any charges? Also can I withdraw the entire amount in a single transaction or must I withdraw in monthly/quarterly/semi-annual/annual frequencies?
    Humbly awaiting your reply/advice.

    • When you took that ULIP , the lock in period was 3 yrs that time, now its 5 yrs for new policies, so for you , you should be able to withdraw it now as your lock in period is over, but there might be some surrender charges , which must be written in your policy document .. check in that ..

      • Krishna

        Thank u for your speedy response. Yes,there is a surrender charge of 25% for the 5th year. And after 5th year there is no charge. I’m a bit confused right now…when will I be able to withdraw without any charges? After 15th Oct 2013 or after 15th Oct 2014? (I paid my first premium on 15th Oct 2009 and then subsequently in 2010 and 2011).
        Do you have any idea if its possible to withdraw the entire amount at one time or does one have to withdraw in installments? I’m asking this because CanaraHSBC have a surrender form (Form B) in which there is a compulsory option of selecting frequency of withdrawal after surrender i.e. A) monthly B) quarterly C) semi-anually D) annually. Which option should I opt for in order to get my money back in the shortest time possible?
        I’m sorry if these questions seem trivial to you but I have absolutely no idea how these things work.
        Thank you and anticipating your response.

  68. Anirban

    Sir, I am having a policy of Wealth
    Plus, I had taken this policy in 23rd
    March 2010 and paid upto March
    2012, rs 50000 yearly. Can I
    surrender this policy now?

  69. Sandeep

    I have buyed a LIC Wealth Plus -ULIP on 4th March,2010. Now i want to surrender this policy but my agent says you cant as now lock in period is 5year. however i belive as per the given date it should be surendered. Please suggest

  70. karan

    I had purchased a Kotak Headstart Child Assure policy last year and had invested 80% in debt and 20% in Equity and had paid a premium of 1 lakh for the year ,after a year I checked the fund value and the fund value was 95k. I did not find this investment profitable as the fund value was less than what i had invested and hence I decided to discountinue.
    The lock in period for the policy is 5 years. I got a call from one of the kotak agent asking me to continue with the ploicy or I would not be getting any money back at the end of 5 years .

    I would like to know, is this how it works or he is just trying to make me pay the premium.

    Please suggest.

    – Karan

  71. DK Singh

    Dear Manish
    I need urgent advice on my ICICI Assure Wealth plus policy that i took in 2010. I have paid premiums for 3 years of 30 k each…instead of at least 90 k or close , the current NAV value is worth 57k only..my premium date is 10 jul..do u think i should continue or simply surrender and take the loss. its so disgusting to get trapped in it..any views ??

  72. kailashchander

    Please tell me the maturity value of my ulip-plan[unit trust of india] ,rRs5000/- per year for fifteen years [1/02/2001 to 01/02/2016].

  73. Sanjeev

    Dear Sir or Madam

    I invest 9 month in ICICI child plan 1500 PM and stop to pay further premium due to some financial reason , now after 5 year’s right now they told me you not get any thing from this amount . pls. suggest what I will do. It it I am not getting any thing as per insurance company or there is any chance to get any thing …

    Pls. revert

  74. Hema

    Hi Manish,
    I have taken ING prospering Life ULIP product on Sep 2012. I have opted to pay 200000 Annual premium. I was told that it is enough to pay premium for 3 years alone to get good benefit(not mentioned in T&C). But the lockin period is 5 years for this product. Is it sufficient to pay 3 year premium alone?
    I am not clear how 3 year premium will help my policy from lapsing and getting good benefit? Is it something related to policy revival procedure? Could you pls brief how policy revival works in ULIP ?

  75. Hema

    Hi Manish,
    Thank you for your response ! I have checked the document.No where it is mentioned to pay only for 3 years and avail the benefit without lapse.

    Actually my concern is , I have paid 2 Lakhs premium for one year and its worth as on today is 1,93,000. I can understand the charges levied during first year.
    If I stop paying premium now,there will be discontinuation charges as 6% in 1st yr,4% in 2nd yr,3% in 3rd yr and 2% or max 2000 in 4th year of the policy.So my asset value will go down further for sure after 5 years.Definitely I cannot get what I invested. Is it advisable to invest till 3 years to get atleast what I invested after 5 years?

    • Actually what you are reffereing to are SURRENDER CHARGES, which will be cut if you surrender the policy . What you can do is , ask them to liquidate the money and keep in your account, which you will take after lock in period.

  76. 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?

  77. 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

  78. 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

  79. 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?

  80. 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.

  81. 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).

  82. 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


  83. 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,

  84. 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.

  85. 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.

  86. 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 !

  87. 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

  88. 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.

  89. 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

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