A unit linked insurance plan (ULIP) is a combination of both investment and insurance. These plans come with a certain degree of liquidity, which means withdrawals are allowed from ULIPs. But the withdrawals are subject to certain terms and conditions. So, if you are about to get a ULIP or withdraw from one, read on to know the basic guidelines about withdrawal.
Can you withdraw the amount from a ULIP?
When you invest in Kotak e-Invest Plan, there is a five-year lock-in period. During this time, you are not allowed to withdraw any money from the fund. After that, you are allowed to partially or completely withdraw the amount from the fund.
It is worth mentioning that even partial withdrawals after the lock-in period will reduce the fund value and the investment’s worth. Thus, it is better not to make withdrawals from this fund at all unless in need of some quick cash urgently.
Let’s take a look at a few other situations in terms of withdrawals from the ULIPs.
· Surrendering before the lock-in period
You are allowed to cancel and surrender the policy before that five-year lock-in period. However, you will not get the money when you surrender. The money that you invest in Kotak e-Invest Plan will only be given to you after five years. Now, at this time, the fund management charges will be deducted from the amount even after you have surrendered it. There will be discontinuation charges that are going to be deducted from the amount. The rest of the performance value of the fund will go into the ‘Discontinued Policy’ fund.
Also, there is a provision to revive the fund in case you have surrendered it within the lock-in period. You can revive the fund within two years of surrendering it. The charges mentioned before will still be levied. But you will not have to go through the hassle of opening a new ULIP account.
Therefore, until it becomes absolutely impossible for you to pay the monthly premium, it is better not to surrender before five years. If you are in a financial slump, at least withdraw the amount after five years.
· Withdrawing the money after the lock-in period
After the lock-in period is done, there are going to be no charges in terms of exit fees. If you want to withdraw the amount now, you will not have to pay anything extra for fund management. However, it is advisable not to withdraw the amount at this point until absolutely necessary.
You will be in a better position to distribute different fund management expenses, along with earning higher returns, when you stay invested for at least fifteen to twenty years.
The bottom line
All in all, both partial and complete withdrawals from the account are allowed after the lock-in period of five years. But whether you should go for it or not is something you need to carefully evaluate and decide. It will diminish the value of your investment.
Click here to know more about Kotak Life ULIP Plan: https://www.kotaklife.com/online-plans/ulip-plan