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5 Things To Do If You’re Not Happy With Your Life Insurance Policy

Adhil Shetty
5 Things To Do If You’re Not Happy With Your Life Insurance Policy

A policy holder could have a myriad of reasons to be unhappy with his or her Life Insurance policy. From being mis-sold a policy by a pushy agent, to outgrowing the policy sum assured, many things could go wrong with an insurance purchase.

If you happen to find yourself in a similar situation, here are five steps you can take to get yourself out of such a predicament.

Use Your Free-Look Period

One of the first things to do when you realise you’ve bought the wrong policy is to make use of the free-look period. The Insurance Regulatory and Development Authority of India (IRDA) ensures you get a 15day free-look period. During this period, you can get in touch with your Life Insurance provider and tell them in writing that you wish to return the policy.

Your premium will then be refunded to you minus the proportionate risk premium for the period, costs of medical tests and stamp duty. This way, you won’t have to wait for the entire year before you can opt to lapse the policy by not paying the premium.

Exit Term Plan

Term plans have lower premium costs, but they do not have the option for a policy surrender. If you wish to exit a term plan, you will lose the corpus paid towards the premiums.

It is advisable to exit a term plan during the free-look period, after which the next best option available to you is to let the policy lapse by not paying the premium.

Buy Additional Life Covers

If your concern is that your sum assured is too low, or the policy features are not attractive, you also have the option of buying additional insurance plans. These plans supplement the sum assured and benefits of your existing insurance plans, thus providing the wholesome coverage you seek.

Exit Endowment and Unit Linked Plan through Policy Surrender

Policy surrender is a voluntary policy termination option offered by insurance companies. This is available after three years from the date of the beginning of the policy. However, you will not get any returns if you surrender it in the first year. Invested money can be refunded after the lock-in period, if you were to surrender the policy between the first and third year.

Once a policy is surrendered after the completion of the lock-in period, the insurance cover shall cease to exist. The policy holder will also receive the surrender value, which is arrived at after evaluating the premiums paid. According to the IRDA, if there is a surrender of policy after five years, it would not attract charges such as surrender charge and fund management charge.

Convert Endowment Plan and ULIP Into A Paid-Up Policy

Many insurers allow you to maintain a paid-up policy. Here, you do not exactly surrender the policy. You just stop paying premiums. The policy continues to exist until it matures, with the benefit reduced proportionately as per the number of years for which premiums have been paid.

For example, a cover for Rs. 25 lakh over 25 years will become Rs. 5 lakh if premiums are paid only for the first five years. The insurance cover is maintained in a paid-up policy. However, there will be no bonuses in the future due to non-payment of premiums. You do have the option to keep the bonuses announced before the policy was paid-up.

In the end, the most important factor while deciding to change or enhance your Life Insurance policy is your current financial situation. Choose wisely by assessing the long-term financial requirements of your family and understanding how much insurance you really need.

Also, when in doubt, go online to buy Life Insurance. Make sure you compare different options before you zero in on the policy best suited for you.