Making Partial Withdrawals Before the Completion of the Lock-in Period
There is no provision under ULIPs to make partial withdrawals before the end of the mandatory lock-in period of five years. Even if you decide to surrender or discontinue the ULIP policy during the lock-in period, you can expect to receive the money (after deduction of surrender and policy discontinuation charges, as applicable) only after completing the five-year period.
Making Partial Withdrawals after the Lock-in Period
As the policyholder, you are eligible to make partial withdrawals after the lock-in period is over. There are, however, specific points that you need to consider before making any withdrawals from the accumulated funds. You cannot withdraw the entire accumulated fund amount before maturity, or without surrendering or discontinuing the policy. If you have purchased the ULIP plan for your child, who is a minor, he or she can make partial withdrawals from the policy only after turning 18.
Effect of Partial Withdrawal on Life Cover
There are chances that you might worry about if there would be any effects of making withdrawals on your insurance coverage? Usually, every partial withdrawal you make leads to a decrease in the sum assured under the ULIP life coverage. In case you have made the withdrawal more than two years before the unfortunate demise of the policyholder, there will be no effect on the sum assured. Here, you must go through the policy document to learn about how partial withdrawals work for your chosen plan coverage.
Regular Payment of Premium is Crucial
To avail of the several benefits of the ULIP plan, including partial withdrawal facility, it is essential that you always pay the premiums as per schedule, keeping the policy active without any interruptions. In case there are any lapses, suspensions or disputes in payment of premiums, the insurance company may disallow further partial withdrawals.
The amount withdrawn after completing the lock-in period is tax-exempt; thus, you can fulfill your immediate life goals with the accumulated funds under ULIP without any tax implications. However, you must adhere to the maximum number of partial withdrawals that you can make in a year, as specified in your policy underwriting so that you can avail of maximum benefit from your ULIP investment.
Canara HSBC Life Insurance plans allows you to maximize your accumulated wealth by investing your savings across seven different fund options. At the same time, you can make partial withdrawals to fulfill your family’s immediate financial needs.
