Generally, unit linked insurance policies (ULIPS) come with a lockin period of 5 years. After this period, the policy can be surrendered to get the complete sum. There will not be any surrender or exiting changes for this. If you are wondering whether there is scope for partial withdrawal of funds from this while continuing the policy, there is the chance but albeit with some conditions.
The lock-in period of 5 years in ULIPS does not allow for any interim withdrawal before that time. you have to wait for the full 5 years for surrendering, discontinuing it.
You have to wait for 5 years even for partial withdrawals. In unit based pensions schemes also, there is no way you can do partial withdrawals before the term. If the policy is taken on the name of minor, you cannot withdraw even after 5 years until the person becomes major.
In case of topup…
· In case you have a topup, there is a condition that the first partial withdrawal should be made from these topups.
· The amount paid in addition to the premium is called topup, the size of which is per the insurance agreement.
· There is permission for partial withdrawal from base policy. There is 5-year lock-in period for topups also. If the topup is still within 5 years, partial withdrawal can be made from base policy.
There are no such limits the extent the policy holder can withdraw but there is a condition that the withdrawal doesn’t extent dill cancellation of policy. You cannot withdraw from ULIPs without at least maintenance sum in it.
Limits based on the type of policy…
· The withdrawal limit is dependent on type of the policy. For example, in a regular ULIP policy, it should have a minimum of 1/3 of its yearly premium, which means if the yearly premium is 3000, the policy should have at least 1000 balance and the above can be withdrawn.
· Some insurance companies have limits set to withdraw only 10% of the paid premiums at once while some companies have condition that two partial withdrawals should be separated by at least 3 months.
· There is a condition that you cannot withdraw more than 50% of the paid premium.
Some policies don’t have any such conditions and you can withdraw as many times you want and can even do it for an amount of 500.
· After getting the request for withdrawal, the insurance managers will cancel the equivalent units from the policy and pay the money.
· The requests received after 3 p.m. are processed only after canceled the units based on next day’s NAV.
Will the insurance coverage change?
· It should be remembered the partial withdrawn sum has insurance coverage. There is change in coverage for partial withdrawals made within 2 years of the death of policy holder. There is no change in coverage for those done before 2 years of death.
· However, these conditions are not applicable to those above 60 years of age and the nominee is paid the full insurance sum with considering partial withdrawals.