All Ulips don’t have loan facility, but may allow partial withdrawal

All Ulips don’t have loan facility, but may allow partial withdrawal

I have heard that insurers give a grace period of a month from the due date for payment of premium and during this period the policy doesn’t get lapsed. If I were to submit a cheque on the last day of the grace period, it may get cleared after two-three working days and not immediately. Will my policy lapse in that scenario?

—Ankur Sharan

The grace period is a period of 15 or 30 days (depending on the premium payment mode) starting from the last premium due date. If the premium is paid through cheque on the last day of the grace period, the policy will continue to be in force subject to the realization of the cheque. The policy will lapse if the cheque is dishonoured.

How do insurers arrive at management fees? Does this fee impact the premium amount?

— Rahi Bhatt

I presume that the management fee that you are referring to in your query is the investment management fees charged by insurance companies on unit-linked insurance plans (Ulips). For Ulips with a maturity of up to 10 years, this fee is capped at a maximum of 1.5% and for Ulips with a maturity period higher than 10 years, this fee is capped at 1.25%.

Individual insurers have the discretion of charging less than this amount. To understand how much you are being charged, please refer to the “benefit illustration" provided by the salesperson of the insurer. The benefit illustration also highlights all other applicable charges.

I bought a Ulip five years back from a private insurer and have paid all the due premiums. I need some cash urgently. Will the insurer give me a loan at a softer rate of interest against my Ulip?

— Sarvesh Mathur

Ulips launched five years back did not give a loan facility. However, a majority of Ulips have the facility of partial withdrawal, which could serve your purpose.

Through this facility, you can withdraw money from your fund value without discontinuing your policy. The terms and conditions of partial withdrawal will be clearly mentioned in the policy document that you would have received at the time of buying the policy.

— Rajiv Jamkhedkar, Managing director & CEO, Aegon Religare Life Insurance

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