When financial challenges arise, you're left wondering what expenses you can cut back on. If you've recently invested in a Unit Linked Insurance Plan (ULIP) but are struggling to pay the premium, you might be considering stopping the payments.
ULIPs: More Than Just a Life Insurance Plan
A ULIP is a hybrid financial product combining a life insurance plan with investment opportunities. It allows policyholders to invest a portion of their premium in equity, debt, or a mix of funds, while the rest goes towards providing life insurance coverage. ULIPs are long-term investments, and consistent premium payments are crucial to maximising their benefits.
What happens when you stop paying ULIP premiums after making your first payment? Will your investment go to waste?
Consequences of Halting ULIP Premium Payments
When you stop paying premiums for your ULIP policy after the first payment, here are a few things you should be aware of:
Policy Status:
- If you miss premium payments, your policy will shift to a "Discontinued Life Policy."
- This means your life insurance coverage will end, and your fund value will be moved to a Discontinued Life Policy fund after applicable charges are deducted.
Revival Opportunity:
- You have three years from the date of the first missed premium to revive your policy by paying the required amount.
- During this time, you'll be notified of your option to restore your coverage.
If You Don’t Revive:
- Your funds will stay in the discontinuance fund, and any profits will be paid out at the end of the lock-in period, after which the policy will be terminated.
Stopping premium payments within the first year comes with the risk of losing your entire investment. Keeping in mind the above details can help you make informed decisions about managing your ULIP policy effectively.
While ULIPs offer flexibility, they require commitment. Discontinuing your ULIP premiums early can lead to reduced benefits, affecting both your investment returns and life cover.
You can use a ULIP calculator to plan your investments wisely. If you're struggling to make payments, it would be wise to consult with your insurance provider to explore options such as partial withdrawals.
Disclaimers:
Unit Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and NAVs of the units may go up or down, based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. IndiaFirst Life Insurance Company Limited is only name of the Insurance Company and _________________ (UIN__________) is only the name of the Unit Linked Life Insurance contract and does not in any way indicate the quality of the contract, its future prospects, or returns. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale.
IndiaFirst Life Insurance Company Limited, IRDAI Regn No.143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North [C] Wing, Tower 4, Nesco IT Park, Nesco Center, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll free No – 1800 209 8700. Email Id:customer.first@indiafirstlife.com, Website :www.indiafirstlife.com, Fax No. +91226570600. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd. under license. Adv. Ref. No.:_________.
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