Jagoinvestor

November 28, 2009

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.

ULIP - Unit Linked Insurance Plan

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), I will get amount 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 years?

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

Conclusion

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

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327 Comments
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Manish
Manish
7 years ago

I have had paid premium only for two years.like i bought policy in 2012 n paid for next year premium too. But now i checked my policy status its foreclised. Will i get any amount or i just lost it.

Alok
Alok
7 years ago

A Very nice article. Thank you very much Manish.
cleared lot of my doubts.

Sachin
Sachin
7 years ago

Is it true that ulips can be sold in a secondary market like a mutual fund?
Please tell me if yes, how can i do so and who do i contact.

balvinder
balvinder
7 years ago

Dear Manish can I get back my money before 5yrlock in period .

Jeffry
Jeffry
7 years ago

Hi Manish,

I have been paying ULIP (HDFC progrowth )premium since 21 months.

Can we skip premium payment for couple of months and continue later.

Why I ask incase of financial crisis like suddenn jobloss or medical emergeny, there wont be sufficient money to pay premium for short period.
please advise.

Regards
Jeffry

Sid
Sid
7 years ago

Hi Manish, Im in a desparate need of your advice. My father was missold 2 ULIP policies of Aviva Life Insurance in January 2010 amounting to Rs.55 Lakhs. One policy was in his name for Rs.25 Lakhs and the other was in my Mother’s name for Rs.30 Lakhs. As per the policy document, he needs to pay premium for 15 years (his age was 57 when he purchased the policies). Any kind of input you can provide can be of great help as the company has clearly told us that we cannot even get a single rupee since we have paid only first year’s premium.

sameer
sameer
7 years ago

Hi Manish,
I purchased ICICI Pru Wealth Builder during FY 2014-2015 and paid my first premium of Rs.50,000. I also claimed tax deduction under 80c for it.. However, I am not satisfied with it and have not paid my second premium for FY 2015-2016. I am now being told by ICICI that since I haven’t paid the 2nd premium, I should show the 1st premium as income gained when I file my IT returns for 2015-2016.
Is this true?

Noel
Noel
7 years ago

hai….
I have a ULIP policy of future generali life insurance taken on 08/08/2009. I was told to pay for minimum 3 years. After 2-3 months they informed to pay min 5 yrs to obtain a good value back. Also informed i will get Min 15% of the premium amount (11000 RS) per year. When i finished my five yrs and met FGI, the informed me a less amount of 39-40 K left in account (instead of premium amount 11k * 5 yrs equals to 55K). Why this happen? How can I get rid of it? any suggestions. And even now after & yrs they mention me to pay for 20 years of total life period of insurance policy.

Sushanta
Sushanta
7 years ago

I have a Uttam Jeevan ULIP plan from ING Life Insurnc., my agent told me if I pay only one premium and then stop I will get my rupees after 5 years with interest.Now after 5 years company says I can not get anything. Please suggest me can I get anything? I am very frustrated now.

Devendra
Devendra
8 years ago

I have a kotak mahindra assured income plan policy of 25272 yearly I paid my premium completely 3 years. Now i want to stop this policy for some personal family problem and get refund . please suggest me if i stop or surrender this policy then i can get refund amount . yes or no and how.
25272*3 year = 75600/- paid.
policy start from 25.04.2013
3 years completed on 25.04.2016.
please help me.

Chandrasg
Chandrasg
8 years ago

Hi Manish,

Thanks for the Great Article. I need a Suggestion on my existing ULIP policy and hoping you could help. I have taken Aviva I growth ( 2 polices = 4166 *2 = 8500 Rupees Per Month). Till now i have paid 15 premiums. Total Amount paid till today on both equals 1,74,000 but the current balance is 1,60,000. It has a Lock period of 5 years (10 year policy). I would like to drop this off and better off move this money to my other investments (my other Investments = {SIP – 15000, PPF – 3000, EPF – 2000, NPS – 8500 Montly}). Please suggest.

Thanks & Regards
Chandra Sekhar G

Abhi
Abhi
8 years ago

My Humble request to all the people,who are reading this bolg is that, never ever go for any ULIPs. This is a No 1 Cheating business. The investors are never benefitted from these schems. This is a big time loss business…. I am one of the last victim for this…Better invest in FD for tax savings or you can go for housing loan or any other option.

Anandaraj
Anandaraj
8 years ago

Dear Mr. Manish sir ,

i have lic policy taken on 2011 , till 2012 i paid my premium amount but after that i didnt pay , now i want to continue that policy .

can i able to cont that policy ?

if i cont any drawback are there

Bidyut
Bidyut
8 years ago

HI Manish,

I have purchased KOTAK life insurance policy of 30k year on 29 Jan. But after received the proposal document i am getting confused by T&C. At the time of purchase it was told me that this for 3 years policy and 10% is guaranteed return. i.e I would received total 108000 after 3 years. Now after receiving the proposal doc found that this a 15 years term policy and payment term is 10 years. and if i surrender the policy after 3 years then i would received around 31K. So I don’t want to continue this policy. Kindly advise me

Regards,
Bidyut

noorjahan
noorjahan
Reply to  Bidyut
8 years ago

i want to know if i stop paying premium before completion of 3 years due to unavoidable circumstances what is the procedure and what benefit i will get from the company and other conditions and also benefits for me.

NANCY
8 years ago

Hlo sir , I really need your advice ,my father had brought a income generated policy from exide and we have just paid 12,500 amount to our agent but we supposed to submit 25,000 per year according to policy ….so my question is if we stop paying or discontinuing this policy what will be the consequences?
And my father didn’t want to continue it..so if we stop paying it kya him ish policy se free ho jay gy ?

Hazra
Hazra
8 years ago

In 2011 , I paid the 1st premium of a future generali guaranteed policy (Rs. 30000/yr)then discontinued. Now can I get my money back?

dsahoo
dsahoo
8 years ago

i am purchase of 6 year plan from sbi life in year oct.2014 of yearly premium Rs.50000/- , if i am a critical position to stop the 1st installment premium now , can i get refund plus interest(i.e-50000+int.) after 6 year .

Rajsingh
Rajsingh
8 years ago

Manish I hv invested in icici Pru Life fund which invests in debt and equity.. It’s a 5 year premium I had to pay… I hv paid 3 annual premiums and the total paid is 9L now since sep 2013. But my fund value is showing at 8.4

Can I stop further 2 premium., can I ask for refund and closure, I am confused.

Help

Rakesh
Rakesh
8 years ago

Hi sir,
I bought HDFC life pro growth plus policy on 19.01.2013
I had paid 3 premius of 36000/year .total 118000 rs.
In currunt situation my fund value is 115000 on 18.01.2016

My doubts are:-
1) Is it a good performing or bad performing.
2) Should i go for further payments.
3) If i stop payment now how much amount i will get after lockin period , is it more then my investment amount.

Please help i don’t want to get less amount then i invested.

Mustafa
Mustafa
8 years ago

Hi Mr. Manish, first i would like to say thanks for doing this job of information,

I purchased IPRU Wealth Builder II in Oct, 2014 and i have paid two premium 125000 now i have decided to stop next premium. as per agent lock in period is 5 years in this case can i get back my money what i have paid or it will be less than paid after 5 years.

Thanks,