Kotak Assured Savings Plan
A plan that offer guaranteed returns and financial protection for your family.
Kotak Guaranteed Savings Plan
A plan that offers long term savings and insurance in one premium.
Kotak Health Shield
Insurance against medical expenses related to heart, brain, liver and Cancer.
When you opt-in for a ULIP policy, the primary motive should be a long term investment. Unit linked insurance plans give you the benefit of both life insurance as well as an option to invest in the market in a single policy. Also, the longer you keep the money invested in plans like ULIPs, the better returns you will get. However, there are a lot of reasons behind people wanting to surrender ULIPs, and it is absolutely alright to surrender a policy if you have an unexpected financial emergency.
Before planning to discontinue ULIP, a policyholder must do their research about lock-in period, the tax implications on surrender value, and the consequences of surrendering the policy before the ULIP lock-in period.
This article will help you learn if a policyholder can surrender ULIPs after two years, whether they have to pay tax if they do not complete the ULIP lock-in period and other important details.
Yes! A policyholder can surrender a policy as per his/her wishes. However, it is made clear while opting for the policy itself that it has a minimum lock-in period of 5-years. Therefore, surrendering ULIPs before completing maturity is not advised and will result in penalty charges and tax implications on surrender value.
So, experts highly advise that a policyholder must complete the tenure of a ULIP policy and serve the lock-in period to avoid penalties and taxes and reap the benefits of maturity of their ULIP policy.
If you discontinue ULIP policy before completing the lock-in period of 5-years, it will have repercussions. Of course, if the policyholder, despite being aware that there is a mandatory five years lock-in period in ULIP, wishes to surrender the policy, he is free to do so. Following are the disadvantages of surrendering ULIPs before its mandatory 5-year policy tenure:
Suppose you surrender a ULIP policy before the minimum lock-in period. In that case, the whole amount received will be calculated as income for the year the policyholder has received, and tax will be changed as per the tax slab they fall into after adjusting this fund to income for that particular, fiscal year.
In conclusion, you can surrender ULIPs before five years. But it is not advised to surrender the fund value on maturity, and other maturity benefits of ULIPs are a great deal.
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Ref. No. KLI/22-23/E-BB/521
