Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals. Know more

Kotak e-Term

Protect your family's financial future. 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 life cover. Know more

Kotak e-Invest

Insurance and Investment in one plan. 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 allow investors to make partial withdrawals throughout the investment tenure based on certain conditions.

  • Mar 14, 2021

Updated on: 4th August, 2023

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

Key takeaways

  • Partial withdrawals allow policyholders to access a portion of their invested amount without surrendering the policy entirely.
  • The lock-in period is typically five years from the date of purchase. During this period, no withdrawals are allowed.
  • After the lock-in period expires, policyholders can make partial withdrawals from the fund value while the policy remains in force.
  • When you make a withdrawal from your ULIP fund, both the fund value and the sum assured decrease by the withdrawn amount.

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 learn the details regarding how to withdraw ULIP policy and what are the limitations.

When Can We Withdraw from ULIP?

Policyholders have the option to make partial withdrawals from their ULIPs after the lock-in period. The lock-in period is typically five years from the date of purchase. During this period, no withdrawals are allowed. After the lock-in period expires, policyholders can make partial withdrawals from the fund value while the policy remains in force. Partial withdrawals allow policyholders to access a portion of their invested amount without surrendering the policy entirely. The exact rules and limits for partial withdrawals vary among different insurance companies and specific ULIP plans.

How Much Amount is Allowed for Partial Withdrawals?

Regarding the upper threshold, it stands at approximately 25% of your fund’s current value upon withdrawal, with the requirement that a minimum of one year’s premium remains within the fund. To illustrate, consider a scenario where an individual purchases a ULIP policy.

As an example, consider a scenario where an individual has purchased a ULIP policy. After a lock-in period of five years, the policy’s fund value stands at ₹3 lakh, with an annual premium of ₹50,000 and a sum assured of ₹6 lakhs. In this context, a quarter of the fund value translates to ₹75,000. By withdrawing ₹75,000, it becomes feasible to execute a partial withdrawal, given that an amount equivalent to one year’s premium (i.e. ₹ 50,000) remains within the fund.

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 coverage 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.

What is the Impact on the Sum Assured?

When you make a withdrawal from your ULIP fund, both the fund value and the sum assured decrease by the withdrawn amount. However, this reduction in the sum assured is temporary and lasts for a span of two years. After this two-year period concludes, the sum assured will automatically revert to its original amount. Consequently, opting for a partial withdrawal will not adversely affect your ULIP policy in the long run.

It’s crucial to bear in mind that the automatic restoration of the sum assured is contingent upon two conditions: firstly, refraining from making any additional withdrawals within the two-year period, and secondly, maintaining the regular payment of due premiums.

Therefore, the sole scenario in which a partial withdrawal from your ULIP policy could have a prolonged impact is if the policyholder passes away during the two-year period following the withdrawal. In such an instance, the reduced sum assured will be disbursed to the nominee.

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.


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 at 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, 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 ensures 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.

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 Plan as a Gift

How to Make Your Financial Portfolio?

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

यूलिप में 8 शुल्क जो आपको अवश्य जानना चाहिए

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

Best Investment Options in India in 2022

Is Life Insurance Investment Worthy Enough

यूनिट लिंक्ड इंश्योरेंस प्लान में लॉयल्टी एडिशन कैसे काम करते हैं

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

ULIPs: Suitable for all

How to Save Money from Salary?

Does Rupee Cost Averaging Work In Unit-Linked Insurance Plans?

Planning Financial Goals and Objectives of Financial Planning

Importance of Portfolio Management

How Increasing Your SIP Every Year Helps You Reach Your Financial Goal Sooner?

Understanding ULIP Risks: What are the Odds of Losing all my Money and Projected Returns?

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

What is Mutual Funds? | How Mutual Funds Work, Definition

How To Invest Money In ULIP?

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

What are the Best Investment Options for Young Adults?

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

8 Charges in ULIP That You Must Know

What are the Minimum and Maximum Investments in ULIP?

How Safe is it to Invest in ULIP plans?

8 Important Tips to Maximize Gains with ULIP Investments

Safe Investment Options with High Returns for FY 2018-19

Know How to Invest at Every Age for Larger Returns

Tax-Deferred Savings Plan: Overview, Benefits, Works

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

Difference Between Guaranteed Savings Plan and ULIP

What is ULIP Renewal?

ULIP Plan or Traditional Insurance Plans - Which is better?

Here's Whether You Should Link ULIP Plan with your Term Insurance

Here's are the uses of ULIP your must be aware of

What are ULIPs and their Types?

What is Lock-In Period in ULIPs?

ULIP Plans Riders You Should Know About

Is ULIP a Complex Financial Product?

Best Investment Plans For You To Invest In 2023

Here's Why it's a Good Time to Explore ULIPs as an Investment

Different Types of ULIP Investments in India

Rate of Interest on Different Investment Plans in India

What is Compound Interest, And How Do I Calculate it?

How to Apply for Death Claim Benefits in ULIPs - Kotak Life

Are Investment Returns Guaranteed in a ULIP?

ULIP vs FD - Which is Better and Why?

What are the Best Investment Options For Females?

ULIP Capital Gain Tax: Check Tax Norms for Capital Gain on ULIPs

Difference Between Passive and Active Investing

How to Manage Your Portfolio Like a Professional?

Best Investment Plans for Children - Secure Your Child's Future

5 Reasons to Have a Child Education Plan

What are Some of the Safest Investment Options in India?

Best Investment Options to Cover Your Child's Education

Unit-Linked Life Insurance (ULIPs) vs. Term Insurance

Creating a second source of income with life insurance

Why Are ULIPs Called Flexible Investments?

How to Increase Net Worth Along with Family Protection

How to Use Recurring Investment Strategies to Build Wealth?

Here's Myths on Investments in ULIP Plans

What is SIP Calculator, and How it Works?

What is Equity Mutual Funds: Meaning, Types & Benefits

What Is Financial Planning?

How to Set Financial Goals for Your Future

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

Why Should You Invest in NPS?

Asset Allocations in ULIP - Know the Top Benefits

यूलिप और उनके प्रकार क्या हैं?

What is Money Management? Definition & Example

4 Rules To Keep In Mind To Secure Your Child’s Future Financially

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

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

Top 10 Investment Strategies to Create Wealth

What is Direct Investment and its Types?

Can NRIs Invest in ULIP Plans Offered in India?

Factors Affecting Share Prices In The Stock Market

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

What Is a Credit Score? Definition, Factors, and Ways to Raise It

Why Should You Build an Emergency Fund?

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

Will You Need to Withdraw or Surrender Money From ULIP

Learn About Safe Investments with High Returns in India

How Can ELSS Funds Help You Save Tax & Create Wealth?

Is the surrender value of ULIP taxable?

Will AI be Your Future Financial Adviser? What Role Will Humans Play?

Early Investing and the Power of Compounding

Can You Invest in Both Term Insurance and ULIP?

What is a Bond Fund and How It Works?

What is ULIP Plan, and How Does it Work?

ULIPs Investment – A Boon or Bane?

What is Savings and the Importance of Saving Money

Planning For Children's Future

Got a Salary Hike? Here’s How to Plan your investment further

How to Cancel ULIP Policy?

Learn About Safe Investments with High Returns in India

यूलिप प्लान में परिपक्वता लाभ क्या हैं: फंड वैल्यू सम एश्योर्ड या ओनली फंड वैल्यू?

Four Financial Lessons from The Vedas on Living Life to The Fullest

How to Create Short-Term and Long-Term Wealth with ULIPs - Kotak Life

What are Index Funds, and How Do They Work?

Why Should I Invest in ULIP?

Balancing Investment Between Risk and Return on Investments

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

Do You Know the Difference Between Savings and Investment?

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

Top 5 Principles That Need to be Followed for Wealth Creation

यूलिप के फायदे और नुकसान क्या हैं?

What is the Time Value of Money (TVM)?

What is a Savings Plan and What are is Benefits?

ULIP NAV - Everything You Need to Know

यूलिप के फायदे (Benefits of ULIP in Hindi)

Know Why You Should Stay Invested in Your ULIP Plan

ULIP policy: What happens when you stop paying ULIP policy premium during lock-in period

What is ULIP and Its Benefits?

Top 11 Investment Plans Available in India

What is NAV in ULIP, and How is it calculated?

Difference Between Linked and Non-Linked Insurance Plans

Receiving regular payouts at various stages of life

Can ULIP Help in Achieving Short-Term Financial Goals?

Planning For Son or Daughter's Wedding

How to Start Saving Money in 10 Simple Ways?

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

Benefits of ULIP as a Child Insurance Plan

How to Fix the 9 Most Common Financial Problems Your Family is Facing

ULIP As An Investment Option For Senior Citizens

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

Savings Plan for Grandchildren

How to Plan your Investment to Achieve Periodic Financial Goals?

Best One-Time Investment Plans in India

Building wealth through regular investing

Can I Surrender My ULIP Policy after 2 Years?

Top ULIP Myths That You Must Stop Believing In

How to Build a Strong Financial Foundation For the Future?

Investments Options to Buy a house in India

What Is Social Impact Investing and How Does It Benefit Society?

Develop an investing plan

All you need to know about claiming maturity proceeds from Ulip

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

How Is ULIP Different from Other Life Insurance Plans? Where Can I Invest - ELSS, ULIP, or PPF?

Why are ULIPs One of the Best Tax Saving Instruments?

ULIP Withdrawal Conditions - Before and After 5 years

Are Money Back Policies Helpful? A Complete Guide

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

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

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

6 Important Tips to Maximize Your Gains with ULIP Investments

All you need to know about Fund Switching in ULIPs

Why ULIP Should Be a Part of Your Investment Portfolio?

How To Track ULIP Performance?

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

Successful Financial Planning for Urban Women

What are loyalty additions, and how do they work in a ULIP?

What is Fund Value in ULIP?

Investment Options for NRIs in India

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

How to Calculate Your ULIP Returns?

5 Best Long Term Investments To Add To Your Portfolio in 2023

Do ULIPs Give Good Returns On Investments?

Can ULIP Policy be Transferred?

How to Manage Inheritance Money?

Endowment Plan vs Fixed Deposit?

Top 5 Investment Options in 2022 for Healthy Returns

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

Can You Have ULIP Plan and Health Insurance Plan Both?

How Do One-Time Investment Plans Work?

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

What are the things to consider before buying ULIPs?

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

वित्तीय संपत्तियां और उनके प्रकार

Is ULIP A Good Investment Option?

What is a Child Money Back Plan, and How Does it Work?

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

Corporate Bonds: Meaning, Types & Benefits

First Job? Here are Some Tips on How to Manage Finances

How ULIPs can help you achieve your financial goals

Long Term Savings Plan - Best Savings Investment Plans in India

Difference Between ULIP and Endowment Plan?

The lesser-known facts about ULIP policy that customers should be aware of?

Customising investments to manage your wealth

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

How to Choose the Best ULIP Plans to Invest in 2022?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

Which are the Best ULIP Plans in India for Children?

How has ULIP Grown Over the Last 3 years?

What are the Best Investment Options for Students in India?

Which is a Better Investment - Mutual Funds Or ULIP?

ULIP Frequently Asked Questions (FAQ) - Kotak Life

ULIP Vs Life Insurance Plan Know the Difference

FAQs on Taxation of ULIPs

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

What are Financial Assets & their types?

Are Gains from ULIP Sale Taxable?

ULIP Benefits You Can Avail from Early Investing

5 Reasons to Buy ULIPS for a Financially Secured Future

How and when should you exit from bad-performing ULIP?

What are the Advantages and Disadvantages of ULIP?

ULIP Investment Benefits You Must Know

How Can ULIP Plan be as an Investment for Your Child