Kotak Life
Close

Buy a Life Insurance Plan in a few clicks

Close

Now you can buy life insurance plan online.

Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

How to Cancel ULIP Policy?

How to Cancel ULIP Policy?
  • 4th Jul 2022 |
  • 3,609

Keywords: How to cancel ULIP policy

We all are aware of the fact that the Unit Linked Insurance Policy, popularly known as ULIP, is among the most famous modern insurance policies in India today. The ULIP policies offer a policyholder the benefit of insurance and market-linked investment in one policy. However, there can be situations when an investor may want to surrender their policy due to uncertain reasons like emergencies, financial issues, etc.

Since, ideally, ULIPs are considered investment plans for the long-term, it is not a wise decision to surrender your ULIP policy before it reaches maturity. However, if you have made up your mind to surrender the ULIP policy, let’s understand How to cancel ULIP policy.

In this article, before we discuss how to cancel ULIP policy, let’s understand when is the best time to surrender a ULIP policy, the charges involved in canceling a ULIP policy, and how to minimize the loss (If any) when doing so.

When is the best time to cancel a ULIP plan?

If you plan to cancel a ULIP policy, you must do it within 15-30 days of buying it. This is because different insurers offer different free look periods. So, you must check for this feature while buying the policy if you are not very confident about investing in ULIP. On the other hand, a free look period is a great option to opt out of the policy simply.

Alternatively, a ULIP plan has a minimum lock-in period of 5-years; surrendering a policy before this duration can incur losses in terms of different types of charges as per the policy guidelines. Also, you may have to pay taxes on the amount you will receive after surrendering the policy, as it will be considered an income.

So, financial advisors suggest that you surrender your ULIP policy only after it has crossed its minimum lock-in tenure. But, again, we would like to reiterate that it’s best to let your ULIP policy mature and then withdraw it for the best results.

Charges involved in the cancelation of ULIP policy

When you cancel a ULIP policy, depending on the current policy year, you must pay some charges. These charges are called discontinuation charges, and the company levies them as a fine to manage its losses due to discontinuation.

For example, if you own a ULIP policy and pay a premium of more than ₹25,000 annually. In that case, the discontinuation charges that will be levied can be as much as ₹6,000, ₹5,000, ₹4,000, and ₹2,000, respectively, for the 1st, 2nd, 3rd, 4th policy year. On the other hand, if the premium amount is below ₹25,000, then the discontinuation charges levied by the insurance company can be ₹3,000, ₹2,000, ₹1,500, and ₹1,000, respectively for the 1st, 2nd, 3rd, 4th policy year. However, these charges can change based on the policy documents, guidelines, and your insurance company’s policies related to surrendering ULIP policy.

Although, as mentioned above, if you surrender the ULIP policy after five years, the insurance company will levy no such charges.

How to cancel ULIP policy?

To cancel any ULIP policy, all you have to do is inform your agent or visit your insurance provider’s office and inform the executives there that you want to discontinue the policy. You can do it online too.

Here are the steps to cancel a ULIP policy:

1. Visit the insurance provider’s office.

2. Keep your policy documents and identification (KYC) documents ready with you.

3. Make sure you carry your bank documents like passbook and cheque book with you.

4. When you inform the executive at the office about canceling your policy, they will provide you with a surrender form. Alternatively, you can fill out this form online too.

5. You can fill out the form and submit all the required documents when prompted.

6. Once the team verifies all the documents, they will initiate the surrender procedure and do all the required calculations and deductions.

7. Once all calculations and deductions have been made, your money will be transferred to the Discontinued Policy (DP) Fund.

8. You can collect your money post-completion of the lock-in period.

Conclusion

It is essential to understand that canceling your ULIP policy will only result in losses if your free look-back period is over and your policy is younger than five years. Therefore, it is suggested that you do not surrender your policy unless you genuinely need it. Also, you must read about the discontinuation/surrender-related clauses and charges in the policy documents before buying one for yourself.

Kotak e-Invest

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

Features

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

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

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

How is Compoud Annual Growth Rate (CAGR) Calculated in ULIP?

Building wealth through regular investing

Are Gains from ULIP Sale Taxable?

Top 6 Investment Plans Available in India

Best Investment Options in India in 2022

What is better - Guaranteed Savings Plan or Fixed Deposit?

How to Start Saving Money in 10 Simple Ways?

4 Important Tips to Maximize Gains with ULIP Investments

Basics of Guaranteed Savings Plan

Benefits of ULIP as a Child Insurance Plan

How Can a Legal Nominee Claim ULIP Benefits are the Policyholder’s Death?

Why Should You Invest in Term Insurance And ULIP?

Learn About Safe Investments with High Returns in India

Investment Options for NRIs in India

Why is Portfolio Diversification Important? How to Diversify Your Portfolio?

What are Some of the Safest Investment Options in India?

Planning Financial Goals and Objectives of Financial Planning

4 Benefits of ULIP Fund-Switching Feature

Difference Between Guaranteed Savings Plan and ULIP

What are the Best Investment Options for Beginners or Amateur Investors in India?

Is This The Right Time To Invest In ULIP? Why or Why Not?

What is the Importance of Saving Money?

What are the Best Short-Term Investment Plans with High Returns?

Why Should You Consider Guaranteed Savings Plan for Long-Term Investment?

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

Important Questions You Must Ask Yourself When Buying a ULIP Plan

What are Tax-Deferred Savings Plans?

ULIP Plan as a Gift

Importance of Portfolio Management

Early Investing and the Power of Compounding

Do You Know the Difference Between Savings and Investment?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

How Much Wealth Can You Create from ULIP in 10 years?

Learn About Safe Investments with High Returns in India

Beginner's Guide to Wealth Creation: Meaning, Strategies, & Importance

Best Investment Options to Cover Your Child's Education

Safe Investment Options with High Returns for FY 2018-19

What is Fund Switch in ULIP? And ULIP Fund Switching Techniques

How To Diversify Portfolio In 2022?

Why Should Parents Invest in Endowment Plan?

Long Term Savings Plan - Best Savings Investment Plans in India

How to Plan your Investment to Achieve Periodic Financial Goals?

How To Track ULIP Performance?

How to Manage Inheritance Money?

How to Increase Net Worth Along with Family Protection

ULIP as an Investment for Your Child

What are the Best Investment Options for Young Adults?

Investments Options to Buy a house in India

Things to Know Before Buying an Endowment Plan

Top 5 Investment Options in 2022 for Healthy Returns

How to Plan Your Child's Education - A Step by Step Guide

Short Term and Long Term ULIP Plans for Wealth Creation

What's Better for Your Child's Education? Child Plans or Mutual Funds?

How to Plan Savings from Salary?

Why ULIP is Better Investment for Long-Term Wealth Creation?

Planning for Your Child's Higher Education? Explore These Investment Options

Creating a second source of income with life insurance

Endowment Plan vs Fixed Deposit?

Top 5 Principles That Need to be Followed for Wealth Creation

Successful Financial Planning for Urban Women

Customising investments to manage your wealth

ULIP vs FD - Which is Better and Why?

Which is a Better Investment - Mutual Funds Or ULIP?

How to Manage Your Portfolio Like a Professional?

What is a Savings Plan and What are is Benefits?

How to Fulfil Your Financial Goals in the Next 10 Years?

Why Do You Need A ULIP Plan - All You Need To Know

Best One-Time Investment Plans in India

What is ULIP Renewal?

Asset Allocations in ULIP - Know the Top Benefits

How Do One-Time Investment Plans Work?

Debt ULIPs vs. Debt Mutual Funds: What's the Difference?

How to Make Your Financial Portfolio?

Are Money Back Policies Helpful? A Complete Guide

3 Tips to Buy Guaranteed Savings Plan

Which are the Best Investment Plans for Indian Senior Citizens In 2022?

Who Should Invest in Savings Plan?

Different Types of Endowment Plans

What are the Best Investment Options For Females?

Complete Savings Plan for Low Income Earners

Receiving regular payouts at various stages of life

Can ULIP Help in Achieving Short-Term Financial Goals?

Savings Plan for Grandchildren

Difference Between Passive and Active Investing

Top 10 Investment Strategies to Create Wealth

What are Deferred Savings Plans?

Which is Better – FD, Mutual Fund, SIP, or ULIP?

What are the Best Investment Options for Students in India?

ULIP Benefits You Can Avail from Early Investing

How Does an Endowment Plan Work?

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan