Readers' Corner: V Philip

I took an endowment plan from a private life insurer five years ago. However, I wish to surrender my policy now. Is it possible to do so without losing money?
Life insurance is a long-term contract, which gives you the maximum benefit by allowing the policy to complete its full term by paying renewal premiums regularly. However, if due to any reason you wish to surrender the policy, you should do so only as the last option. Surrendering a traditional endowment policy will always attract a penalty, which means you would lose some money, depending on when you surrender the plan and the number of years left in the policy term.

In the case of a unit-linked insurance plan, you can surrender the plan after a lock-in period of five years, after which there is no penalty. But if there is any requirement of funds, you can consider taking a loan against your endowment policy. Insurers offer a loan of 80-90 per cent of the surrender value of the policy, depending on the terms and conditions of the plan. The rate of interest charged on these loans is usually cheaper than that of a personal loan.

What if a life insurer refuses to take back the policy within the free-look period? Also, under what circumstances can I return my insurance policy?
The free-look period is for 15 days within which the policyholder can review the policy issued in his/her name. If you wish to avail the free-look period, you are required to contact the insurer within 15 days of receiving the policy and provide a detailed justification of the reasons why the policy is being cancelled. In such a situation, the insurer cannot refuse to take back the policy and refund the premium.

However, in case a justification is not provided or the reasons are not acceptable to the insurer and the free-look period is over, the insurer can refuse to take back the policy. You can return the policy under the free-look period if you are not satisfied with the terms and conditions of the policy with regards to meeting your requirements or financial goals or if you feel that certain points were not disclosed to you at the time of concluding the sale, which if disclosed, you would not have considered the purchase. You cannot return the policy in case of an error in name or address, which can be corrected through an endorsement.

V Philip,
CEO of Bajaj Allianz Life Insurance answers your queries
 

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in