Money Tip: Have ULIP? Before signing up for settlement, this is what you should know for sure
Insurance Regulatory and Development Authority of India (IRDAI) has allowed life insurance companies to offer settlement options to policyholders whose ULIPS are maturing up to 31 May 2020. It is important to know these important points before you opt for a settlement
The coronavirus pandemic has had a very adverse impact on the markets, making them highly volatile. The March month was specifically bad in terms of market uncertainties forcing the insurance regulator to announce relief measures for Unit Linked Insurance Policies (ULIPs). The Insurance Regulatory and Development Authority of India (IRDAI) has allowed life insurance companies to offer settlement options to policyholders whose ULIPS are maturing up to 31 May 2020. It is important to know these important points before you opt for a settlement.
But before you opt for it, know these important things:
-- Settlement option under ULIP is exercised by the policyholder of a unit linked life insurance policy to receive the maturity proceeds in installments.
-- The option is available only for the policyholder and on maturity of the policy and cannot be exercised by a nominee in case of death benefit.
-- In ULIPs, the investment risk is borne by the policyholder. On maturity, the number of units available to the credit of the policy will be encashed at the Net Asset Value (NAV) per unit as on date of maturity. Maturity proceeds would depend on the NAV.
-- You cannot postpone the maturity date and only take the maturity proceeds in installments.
-- The frequency of withdrawal depends on the periodicity made available by the insurer – monthly, quarterly, half-yearly or yearly. The period of settlement option can be for a maximum of 5 years from the date of maturity.
-- Anytime during the 5 years you can opt for the complete withdrawal and the balance units as on the date of option will be encashed at the NAV rate prevailing on that date.
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-- The life insurance cover will not continue during settlement option and in case of the death of the policyholder during settlement option period, the nominee will be paid the remaining units at the NAV as on the date of intimation of death.
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