Readers' Corner: Life Insurance

Since life insurance is long-term contact, it is difficult for policyholder to change renewal date

Is there any provision to withdraw money partially from the Ulip like it can be done in a mutual fund? Can I withdraw some money to meet an emergency but keep the Ulip policy going by paying premiums later on?

Yes, even in Ulips the insured is allowed to make partial withdrawals to meet emergency requirements. You can withdraw minimum Rs 5,000 after completion of five years of investing in the policy. You can keep the policy active by ensuring that certain amount is retained in the fund. In case you make any partial withdrawal in an emergency situation, the policy will not get affected and will continue for the rest of its tenure. 

My life insurance policy’s renewal date is in March. I wish to change it to December. There’s a huge outflow from my salary in tax-related instruments in February and March. Do insurers allow change in date of renewal? If not, is it possible to pay for renewal three months in advance?

Life insurance policy is a long-term contract between the insurer and the insured, therefore it is difficult for a policyholder to change the date of renewal. Assuming that your premium payment mode is annual, you have the option to change the mode of payment at the time of your policy anniversary or renewal from annual to semi-annual/quarterly/monthly. According to  Irdai regulations you can pay the advance premium within the same financial year for the premium due in that financial year, thereby you will be able to pay your renewal due in March three months in advance i.e. in the month of December. 

I am due to retire in a few months. My retirement corpus altogether would be over Rs 1 crore. I am exploring option to invest this for a regular income. Annuity is one among them. I want to know what are the current interest rates offered on annuity? Are there plans where the insurance company increases the annuity paid to me as I grow older to keep up with rising prices? 

Annuity rates differ for different companies for different corpus amounts. There are several annuity options where you have an amount fixed for life, amount fixed for life with the refund of the corpus amount in case of death of the annuitant and amount fixed for the chosen period and as long as you survive. You also have plans with amount fixed to be paid to husband and wife under joint life option where payouts are made till the last survivor is alive, and plan options where corpus amount is refunded in case of death of both the annuitants under the joint life option. Yes, you also have plans where the amount increases per annum and can give you an increased payout. You can select an option that best suits your needs.

I have been investing in a unit-linked insurance plan (aggressive – entire corpus in equities) for the last five years. But I am unhappy with the returns. What are the things I should keep in mind if I want to surrender it? 

In case you are willing to surrender your Ulip, you should look at the current fund value and the risk cover of the plan. According to the current Ulip guidelines (post September 1, 2010), no surrender charges are levied if a customer surrenders the policy after completion of five-year term. In your case, since you have completed five years there will be no deductions.

The writer is MD & CEO – BSLI & Dy. CE – ABFSG ,The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in.