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Can ULIP Policy be Transferred?

Investment enables you to make your money work for itself. Through regular investments you can develop a financial discipline. Know about if ULIP policy can be transferred.

  • 3,988 Views | Updated on: Dec 26, 2023

In today’s time, various options have flooded the market owing to consumer-centric policies laid out by insurers. One of the best and most beneficial investment options is ULIP. It is a highly-flexible investment plan that offers the policyholder the dual advantage of insurance and investment. It is ideally suited for short-term financial gains and even long-term fiscal coverage. When you pay the premium amount, a part of it is invested in the insurance plan, whereas the remaining part is invested in different funds.

What if you are not satisfied with the profits or if you find some other funds profitable? Can ULIP policy be transferred in that case? Yes, it can be! You can easily switch your funds to the most beneficial funds in the market.

What is Fund Switching?

Fund switching is the option where the policyholder can move their money between the equity and debt funds. The policyholder can use the switch option only if they have opted for the Fixed Portfolio Strategy in your Unit Linked Insurance Policy.

The fund switching applies only to the money they have invested in the existing funds. You can use the premium redirection service to move your new premiums into a different fund. Switching funds in an existing ULIP is very beneficial as it gives you the desired safety against fluctuations in fund performance as per market conditions.

The benefit of switching funds

The main advantage of switching funds is to leverage the funds that are performing well. If the funds available in your portfolio are not yielding profits or are performing low compared to other funds, then you can exercise this option. You can either fully transfer your fund’s units or partially transfer them into different fund options. But, to ensure that you gain the maximum from fund switching, you must keep track of your fund performance as it will enable you to make an informed decision. As the insurers declare funds’ net asset value periodically, it becomes easy to track your scheme’s performance in ULIP.

When to Switch?

The policyholder can’t anticipate the losses or profits every time, but you can switch to safer fund options and optimize investments if you foresee a drop in the market. You can quickly transfer a large portion of your investments to debt funds and switch them back into equity once the market rises, according to your preference.

If your ULIP policy is about to mature or you are nearing your financial goals, you should park a sizable part of your capital in safe debt a few years in advance.

Process of Switching the Funds

Insurer offers two options for fund switching, which include:

Option 1: Form Submission

You must submit a duly-filled signed endorsement form to the nearest insurer’s branch to transfer your funds. In the form, you need to mention the exact details of the number of funds you want to be transferred, the existing fund plan and the new fund option chosen.

Based on your fund switch request, current funds will be transferred to the new fund option.

Option 2: Insurer Portal

Policyholders can efficiently and effectively manage their fund switches through the self-service facilities offered by different life insurance companies on their portals. For this, you need to follow the below-mentioned steps:

1.Log on to the insurer portal with your username and password

2.Enter the percentage of funds you want to transfer from the old fund to the new fund

3.Once you enter the percentage, the insurer will process your request shortly.

If you do not have time to track the insurance market, you can opt for the automatic switching option, where the fund manager will switch your funds between equity and debt on your behalf.

Conclusion

Switching funds allows the investors to insulate themselves from market fluctuations to a great extent. However, exercise this option wisely.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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

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