Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What is Partial Withdrawal in ULIPs?

Partial withdrawal in ULIP : Unit Linked Insurance Plans allows investors to make partial withdrawals throughout the investment tenure, based on certain conditions. Read more here on this article

  • Mar 14, 2021

ULIP, or Unit Linked Insurance plan refers to an insurance plan that offers dual benefits, including an investment plan to fulfil your long-term goals and a life cover to financially protect your family during an unfortunate event. The premium amount that is paid towards ULIP is divided into two parts.

A part of it is contributed to your life cover, and the remaining is invested in the fund of your choice. ULIPs make inflation-beating returns on your investment possible when continued until the end of the policy term. However, it can also act as an interim source of funds if you face a financial shortfall during the policy period. You can redeem some of the units accumulated in your fund before the policy end date. This partial withdrawal facility helps you avoid digging into your savings, taking expensive loans, or having to sell your assets. One unique advantage of the ULIP plan is that you can take out a part of your accumulated fund value before the policy matures.

Now that you know what is policy withdrawal, let’s dive deep to know the details regarding how to withdraw ULIP policy and what are the limitations.

How Does Partial Withdrawal Work?

A part of the premium you pay for your ULIP provides a life insurance cover. The insurer invests the remaining amount in the financial instruments you select as per your capacity to bear market fluctuations. The pooled investment from all investors in a ULIP is divided into units. A price is assigned to each unit, known as the Net Asset Value (NAV). It is the price at which investors can purchase and sell ULIP units. The NAV goes up when the value of the underlying funds increases.

Based on the premium you pay; units are assigned to you. You can encash some of those units after the first five years from the ULIP start date, the lock-in period. The amount you receive depends on the total NAV of the number of units redeemed.

Premium allocation

A fixed premium needs to be paid if you invest in a ULIP. A part of the premium is used for providing coverag Replacement of income e, while the remaining part is invested in various capital market funds.

Withdrawal of funds

Part of the premium that gets invested is further divided into units. ULIP partial withdrawal allows you to redeem some of those units in case of any emergency.

How Does Partial Withdrawal in ULIP Affect Your Investment and Life Cover?

The worth of your investment, the fund value, gets reduced by the amount withdrawn. Moreover, your life cover amount is also lowered by a sum proportionate to the encashed amount. The coverage remains reduced for two years from the withdrawal date. Hence, in case of an unfortunate event during this interval, your nominee will receive a reduced payout.

However, the amount payable to your nominee is restored to the original sum assured after two years. But your fund value after these two years will depend on the prevailing NAV and the premiums you invest.

How to choose the right plan?

While planning to buy ULIP, it is advisable to check different plans that provide maximum benefits. In addition, various factors like stability, customer service quality, the reputation of the brand being opted for, etc., must be considered that can help the policyholder’s family financially during any unfortunate incident.

Here are some of the top features of the plan:

  • Financial protection: In case of any unfortunate incident, the nominee gets the claim amount along with the fund value.
  • Rewards: By regularly paying the premium amount and staying invested with the plan, you can get various loyalty additions and wealth booster benefits in your investment.
  • Top-up option: Investment from your premium amount can be increased anytime as per the policyholder’s convenience.
  • Flexible payment options: The premiums of ULIPs can either be paid monthly, half-yearly, or yearly.
  • Tax Benefit: Partial withdrawal from ULIP is taxable; therefore, you enjoy lots of benefits.

Terms and Conditions for Partial Withdrawal

  • On February 1, 2020, the Insurance Regulatory and Development Authority of India (IRDAI) made three partial withdrawals permissible during the entire ULIP tenure. You can make such withdrawals on your children’s wedding, their college admission, for buying property, and also if any critical illness strikes.
  • Partial withdrawals are possible only when the ULIP policyholder is at least 18 years old. Therefore, if your ULIP insures a minor, you have to wait until the child becomes an adult before making partial withdrawals.
  • The amount you withdraw is not taxable subject to the conditions under Section 10 (10D) of the Income Tax Act, 1961.
  • The sum you can withdraw depends on your insurance provider and your policy type. You must leave enough funds to cover operational costs and life cover charges.


Partial withdrawals can help you tide over financial crunches. But it affects the monetary benefit your loved ones are entitled to receive. Moreover, the returns you can expect at the end of the investment period also take a hit. Hence, financial experts advise against ULIP partial withdrawal unless it is an absolute emergency in order to avail the benefit of long-term capital growth.

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Kotak e-Invest

Download Brochure


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


- A Consumer Education Initiative series by Kotak Life

Similar Articles

ULIP: Can You Surrender ULIPs or Withdraw Money from It?

Do Pension Plans Allow any Death Benefits?

5 Reasons Why ULIP Plans are One of The Best Retirement Planning Instruments

How Much Corpus Does One Need for Retirement?

Is it possible to live a financially independent life, even after you retire?

How Can I Achieve My Wealth Goal with ULIP Investment?

Is ULIP Better Than FD?

Tips to invest your voluntary retirement scheme money

What Are Retirement Pension Plans?

What Happens If I Stop Paying My ULIP Policy Premium After Paying the First Premium? Will I Still Get The Return?

Long Term Investment Guide for Your Retirement

Top 4 Mistakes To Avoid While Planning For Your Retirement

How To Calculate The Present Value And Future Value Of Annuities?

Who Gets the Benefit After the Maturity of ULIP: The Proposer or The Life Insured?

A Quick Guide to Retirement Plans

Types of Retirement Plans

Is ULIP a Complex Financial Product?

How Do Annuity Options Work In NPS

How To Keep Your Retirement Accounts from Being Hacked?

What is the Death Claim Payable in the Case of ULIP?

What are ULIPs and their Types?

What are the Uses of ULIP?

Benefits Of Retirement & How Investments Can Help You Enjoy Them

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

How should one decide on fund allocation within NPS?

What are the Rules for Exit From NPS?

यूलिप और उनके प्रकार क्या हैं?

Importance of financial Planning for Retirement

Is ULIP A Good Investment Option?

Top 6 Reasons Why You Should Get A Pension Plan

Meaning of Sum Assured in a ULIP

How To Choose The Right Pension Plan?

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

What Happens to ULIP Premiums Paid if the Market Crashes?

Un-Retirement - Are You Ready For It?

How Does Pension Plans in India Works?

Here's What Retirement Would Look Like 30 Years From Now

What To Do With Your Retirement Accounts During An Employment Lapse?

A Beginner's Guide to Understanding 401k Retirement Plan

What are Fixed Maturity Plans and Why Should I Invest in Them?

Types of Pension Plans for Your Retirement

Best Insurance Plans for a Guaranteed Monthly Income After Retirement!

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

Do ULIPs Give Good Returns On Investments?

5 Retirement Planning Tips for a Financially Controlled Post-Employment Life

7 Secrets that can Make Your Post-Retirement Phase Prosperous

How Does ULIP Work in India?

How Quickly is Fund Switch Effected in ULIPs? Is it Done the Same Day or After a Particular Number of Days?

Top 6 Flexible Benefits That ULIPs Offer

Which Pension Plan Suits You best?

5 Steps to Gift a Smart Retirement Plan to Your Parents

Why You Should Invest In An Annuity Plan?

Ten Signs That You're Ready to Retire

Looking for Ways to Earn Lifetime Income in Retirement? Here Are 6 of the Top Options

Are Annuities Great For Early Retirement?

Demystifying the Retirement Planning Process

Retirement Planning for Millennials

What is a Retirement Plan - What are its Features?

How Safe is it to Invest in ULIP plans?

Top 4 Myths About ULIP Investments You Should Know

How Can ULIPs Help You Plan for Your Child's Future?

Invest for your second innings with a guaranteed savings plan

What is the Minimum Lock-in Period for ULIP?

Retirement Planning at 50? You Are Still Good to Go

5 Reasons to Buy ULIP for a Secured Financial Future

Getting Close to Retirement? Six Key Retirement Planning Tips That Can Help You Retire

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

Types of Annuity Plan | Annuity Definition - Meaning & Key Benefits

What are the 4 Financial Phases of Retirement? How to Budget For Each One?

What are the things to consider before buying ULIPs?

Give Your Retirement Savings A Booster-Shot with Annuities

Retirement: A New Start to Life!

Can I Surrender My ULIP Policy after 2 Years?

6 Signs That You Are Not Financially Ready For An Early Retirement

ELSS vs ULIP: Which is a Better Investment?

Retirement and Pension Plans in India- What are Your Options?

Worried About Running Out of Money in Retirement? 4 Tips to Avoid This Crisis

Is it Suggestible to Take a ULIP Plan Linked with a Term Plan?

What is Fund Value in ULIP?

Retirement Planning Guide: These 5 Steps Will Help You Towards a Safe, Secure and Fun Retirement

ULIP Plan or Traditional Insurance Plans - Which is better?

What Are Mortality Charges In ULIP?

Are You Planning an Early Retirement? Here's Why Buying Annuity Plan Will Make Sense

What are the Chances of Losing all my Money in ULIP and How Much Return Should I Expect?

At What Age Should You Start Your Retirement Planning?

Different Types of ULIP Investments in India

Can NRIs Invest in ULIP Plans Offered in India?

What are the minimum and maximum investment in ULIP? Would the Whole Amount Insured in The ULIP Insurance be Invested in the Market?

The Significance of Number 8,000 in Retirement Planning

Why Should You start Retirement Planning as soon as you start a job?

Advantages of Pension Schemes and Retirement Plans

Retirement Planning: Use our Retirement Calculator to Plan Ahead

What is an Annuity Plan, and How Does Annuity Plan Work?

Retirement Planning Guide for Working Men and Women

10 Steps to Figure Out How Much Money You Will Need After You Retire

Retirement planning with a systematic life insurance plan

Difference Between Unit-Linked Insurance Plans and Non-Linked Plans

Retirement Planning - How To Calculate Your Retirement Premium in India?

What is Premium Redirection in ULIPs Plans | ULIP Insurance Plans | Kotak Life Insurance

Know Why You Should Stay Invested in Your ULIP Plan

Which Is Better: ULIP or SIP?

Top Investment Options for Retirement Planning

Why ULIP Should Be a Part of Your Investment Portfolio?

Save Early to Keep Living Your Dreams Post Retirement

ULIPs or Pension Plans – Which is a Better Retirement Plan?

What is Lock-In Period in ULIPs?

What are the Charges Levied on ULIP?

Single Premium ULIP or a PPF - Which One is Better?

Different Types of Retirement Schemes

5 Notable Investment Options for Retirees

What are the Benefits of ULIP - Explained

Annuity Plan | How to Choose the Right Annuity Plan | Kotak Life

Does Having Both ULIP Plan and Other Health Insurance Plan Make Sense?

5 Common ULIP Myths That You Should Stop Believing

What is the difference between Life Insurance and ULIP?

Benefits of Early Retirement Planning in India

What are the Instruments Available for Building a Retirement Corpus?

NPS for Housewife

What tax benefits are there on saving for retirement?

How has ULIP Grown Over the Last 3 years?

FAQs on Taxation of ULIPs

How Does NPS Work?

Importance of Retirement Planning

How Has NPS Performed in Comparison with Other Instruments?

How to Win at Retirement Savings?

Benefits of Early Retirement Plans

How to Build a Tax-Free Pension Income for Retirement?

Is it Advisable to Withdraw the ULIP Insurance Policy After 5 Years?

EPF Grievance Management: All You Need to Know

ULIP Tax Benefits: यहां निवेश करने पर मिलते हैं 5 बड़े फायदे

Is ULIP a Good Option for People Above 60?

Terminologies You Should Understand About Retirement Plans

What are the Differences Between ELSS ULIP and Mutual Funds?

What is a Defined Benefit Plan and How it Works?

How To Make Most of Your Money After Retirement?

Is It Worth Buying ULIP Plans For 10 Years?

Understanding Annuity Plans

Calculating a Retirement Corpus that can Support Your Lifestyle

Why Should Retirement Planning Be on Top of Your Priority List?

Inflation: A Key Factor to Consider into Retirement Planning

Saving for approaching retirement with retirement insurance

How to Maximize Your Retirement Savings with a Pension Scheme in India

How can NPS help you save tax?

Pros and Cons of Retirement Annuities

Why Should You Invest in NPS?

यूलिप में 8 शुल्क जो आपको अवश्य जानना चाहिए

What Are Superannuation Benefits?