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Surrender of IPRU Wealth Builder II ULIP Policy

My age: 26. LIC policy holding: Jeevan Anand. Yearly Premium of 44K for 23 years guaranteed returns of 10 lacs on maturity and 10 lac after death or 100 years whichever is earlier. About the 2 IPRU Wealth Builder II ULIP policies: 1. ULIP: Yearly premium of 50K, Sum assured: 5lacs, Policy Maturity Date: 2034, Fund allocation for 50K premium. 2. ULIP: Yearly premium of 1.2lacs, Sum assured: 15lacs, Policy Maturity Date: 2040, Fund allocation for 1.2lacs premium. I have few queries: 1. What if I stop paying premium now? Will I get the money immediately? 2. For 50K premium that I have paid twice, I see now the value is 100852.81. Shall I stop its premium payment and invest that amount in PPF or ELSS. For 1.2lacs, since the value is down than what I have paid, shall I do the same as for 50K i.e. as soon as it crosses the value more than what I invested? 3. For both ULIP, I have mentioned the Sum assured with the maturity year. Will I get the sum assured only after the maturity year even if I stop paying the premium after 5 years? It will be more valuable if my these queries are solved as I will learn not to invest any more in ULIPs and advice the same to my acquaintances. I am ready to bear the losses if you advice me to stop totally as I don't want to make any more mistakes. Rather I will start ELSS?

Jan 12, 2016 by Avinash Malli, Navi Mumbai  |   Life Insurance

Unfortunately IPRU Wealth Builder II ULIP has a lock in period of 5 years. Therefore, if you stop paying premiums now, you will have to wait for 5 years since the policy inception to get your money. If you stop paying premium for your respective policies, ICICI Prudential send you a notice within a period of fifteen days from the date of expiry of the grace period, requesting you to either pay your overdue premium within a notice period of 30 days or discontinue your policy. If you choose to discontinue your policy, your life cover will cease immediately and your fund value (based on prevailing NAVs) will be transferred to a discontinued policy fund after deducting surrender charges. Surrender charges for IPRU Wealth Builder II is as follows:-

  1. If you surrender your policy in the first policy year, then surrender charges will be lower of 6% of Annual Premium or Fund value, subject to maximum charge of Rs 6,000

  2. If you surrender your policy in the second policy year, then surrender charges will be lower of 4% of Annual Premium or Fund value, subject to maximum charge of Rs 5,000

  3. If you surrender your policy in the third policy year, then surrender charges will be lower of 3% of Annual Premium or Fund value, subject to maximum charge of Rs 4,000

  4. If you surrender your policy in the fourth policy year, then surrender charges will be lower of 2% of Annual Premium or Fund value, subject to maximum charge of Rs 2,000

While your fund value remains in the discontinued policy fund, an annual fund management charge of 0.5% will be deducted from your fund value. While your fund remains in the discontinued policy fund, a minimum guaranteed interest rate as declared by IRDA will accrue to you. Current IRDA minimum guaranteed interest rate is 4%. In the event of an unfortunate death during the period when your fund is in the discontinues policy fund, your nominee will be paid the fund value.

If you surrender your policies after 5 years, then you will be paid the fund values of your policy. You do not have to wait till maturity of the policy. There are no surrender charges, if you continue your policies for five years. After 5 years, you also have the option of making your policy paid up, wherein your policy will continue till maturity with the benefits and charges, as per the original terms and conditions.

Also, if you plan to continue your ULIP policies for 5 years, you can consider switching from the underperforming funds to the funds that are performing well so that you can better returns in the next 3 – 4 years. Refer to your policy document and / or IPRU Wealth Builder II product brochure to know more about fund switching. You can also your insurance agent or call ICICI Prudential Life Insurance.

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