You can revive your ULIPs but avoid discontinuing it

Insurance Regulatory and Development Authority (IRDA) has mandated insurers to allow policyholder to revive Unit-Linked Insurance Plan (ULIP) within two years of last premium paid but not later than the lock-in period expired i.e. if you have paid premium for the first year you can revive the policy in the next two years whereas, if you have stopped to pay premium in the 4th year then you have only one year to revive as at present there is five year lock-in period. Earlier policyholders were need to revive their ULIPs within the grace period of 30-45 days or his policy was considered lapsed; the insurer deducted the surrender charge of 6% in the first year and then insurer use to move the money in separate discontinuance fund; which is consist of fund value of all discontinued policies with the income earned on them. And policyholders were paid after the lock-in period ended.

If you are reviving policy within six months it is easy but if you want revive your policy after that, then insurers may attach conditions or can increase your premiums.

Insurers may ask you for medical test as it may have the fear that you are reviving policy due to any medical emergency or fear of death hence, this can lead to increase in premiums.

Insurers may also increase your premium if your premium slab has changed; as there is different premium for different premium slab; premium for those who are in the age of 25-35 years is similar. It may happen that when you have discontinued the policy you may be in the 25-35 age slab and now when you are reviving your policy then you might have entered in another slab.

Therefore, policyholder should avoid discontinuing policy as ULIPs invest in equities and if you discontinue policy then your fund is transferred to debt where you can get mere return of 4-5%.

Before September 2010 ULIPs were mis-sold by saying that you have to pay premium for first three years which was the lock-in period then; and policyholders who opted for costly ULIPs charging 20-60% premium discontinued mid-way. But as Ulip Plan Comparison is long term investment hence you should be invested in for long term to get the full benefit of it. As equities have outperformed all asset classes in long run. Hence, you should remain invested in ULIPs for long term so that it can give you return equal or even better than mutual funds.

Source: https://www.policymantra.com/blog/you-can-revive-your-ulips-but-avoid-discontinuing-it/Insurance Regulatory and Development Authority (IRDA) has mandated insurers to allow policyholder to revive Unit-Linked Insurance Plan (ULIP) within two years of last premium paid but not later than the lock-in period expired i.e. if you have paid premium for the first year you can revive the policy in the next two years whereas, if you have stopped to pay premium in the 4th year then you have only one year to revive as at present there is five year lock-in period. Earlier policyholders were need to revive their ULIPs within the grace period of 30-45 days or his policy was considered lapsed; the insurer deducted the surrender charge of 6% in the first year and then insurer use to move the money in separate discontinuance fund; which is consist of fund value of all discontinued policies with the income earned on them. And policyholders were paid after the lock-in period ended.

If you are reviving policy within six months it is easy but if you want revive your policy after that, then insurers may attach conditions or can increase your premiums.

Insurers may ask you for medical test as it may have the fear that you are reviving policy due to any medical emergency or fear of death hence, this can lead to increase in premiums.

Insurers may also increase your premium if your premium slab has changed; as there is different premium for different premium slab; premium for those who are in the age of 25-35 years is similar. It may happen that when you have discontinued the policy you may be in the 25-35 age slab and now when you are reviving your policy then you might have entered in another slab.

Therefore, policyholder should avoid discontinuing policy as ULIPs invest in equities and if you discontinue policy then your fund is transferred to debt where you can get mere return of 4-5%.

Before September 2010 ULIPs were mis-sold by saying that you have to pay premium for first three years which was the lock-in period then; and policyholders who opted for costly ULIPs charging 20-60% premium discontinued mid-way. But as Ulip Plan Comparison is long term investment hence you should be invested in for long term to get the full benefit of it. As equities have outperformed all asset classes in long run. Hence, you should remain invested in ULIPs for long term so that it can give you return equal or even better than mutual funds.

Source: http://www.articles.howto-tips.com/HowTo-Article-Directory/you-can-revive-your-ulips-avoid-discontinuing-it