Brought A Wrong ULIP? Know-How to Cancel Your Policy and Get the Right One

The Right Ulip Fund

ULIP is a great way to start investing your money and getting substantial returns in the long run. There are multiple reasons as to why should I invest in ULIP. The premium is invested in 2 parts – the first part fulfils your life insurance needs, and the other part helps you grow your money. The 2nd part gets invested in ULIP funds, and hence, there is a good chance of earning good returns on your hard-earned money.

One more advantage of such plans is that you get tax benefits on the premiums. Under Section 80C of Income Tax Act, 1961, the taxes are deductible up to INR 1,50,000 on taxable income.

It also provides a wide range of funds so that you can choose the one that fits your risk appetite. Following are the various types of ULIP funds

  • Equity funds
  • Debt funds
  • Income and Bond funds
  • Cash funds

Sometimes we tend to misunderstand the terms of the policy before buying it. Therefore, it is vital to read the terms and conditions of the ULIP plan correctly before selecting it. Also, make sure that the chosen policy fulfils your financial needs.

In such cases, the policyholder signing up for a wrong policy can still cancel the policy. Each policy has a look-in period of 15 days for the policyholder to understand his policy and see whether it gets aligned with his needs or not. You can get a refund with some deductions if you apply for the cancellation within the free-look-in period.

These 15 days free-lock-in period starts from the day you receive your policy papers. Once you get the policy papers, it is the responsibility of the policyholder to go through the terms correctly and find out more from the insurer about it. This will help the policyholder not only to understand the policy well but also to check if the terms are aligned to his needs.

If the policyholder feels that they have applied for a wrong policy, they must immediately apply for cancellation in writing to the insurer.

The process of cancellation is as follows:

  1. Once the policyholder realizes that the policy does not align with his needs, he must immediately apply for cancellation in writing.
  2. You also need to mention the policy details, date of receipt of the policy document, the reason for cancellation, and agent details in the application.
  3. The insurance company will take into consideration your request and try to understand the reason for cancellation and provide solutions for the same. If the policyholder still wants to cancel the policy, the insurance company has to process the request.

How to get the right ULIP plan?

ULIP plans are one of the most versatile life insurance-cum-investment options one can opt for. Hence, it becomes important for the policyholder to select a ULIP plan that will address their financial goals. There are benefits like tax deductions under section 80C that help the policyholder to save more money.

Mentioned below are the factors you must remember before selecting a ULIP plan:

  • Check the available funds in which your plan invests for good returns. There are generally two types of basic funds in ULIP in which you can invest – Equities and debt funds. The selection of these funds should be as per your risk appetite. If you are an aggressive investor, go for equities otherwise go for debt funds.
  • Checking for applicable charges is one of the things you must ensure without fail. There are different charges, which will be counted as deductions, and they will decide the overall cost of your ULIP plan.
  • You must optimize your investment regularly with the help of the fund switching option. Several factors will decide the returns of investment in ULIP plan and these will be changing with time. The various funds available under your plan are subjected to market risks. Hence their value will keep fluctuating throughout the policy term.

It is the responsibility of the policyholder not to invest in any long-term plan without doing their due diligence. While choosing the ULIP policy, always research all your options, check the plan to see if it fulfils your needs and then go for the best ULIP plan.

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