Let’s face it: there are enough times when we buy something on impulse and end up regretting our purchase. Buying a life insurance policy is no different. Many are often found to be unhappy with their life insurance policies. From being mis-informed about the policy sum assured to not-so-favourable terms and conditions, a myriad of things can actually go wrong with a life insurance policy.
The BIG QUESTION:
“What should you do when you are struck in a similar situation?”
Let us make things simpler for you! Read on to know 5 things you must do to get out of such a predicament.
What are these 5 things?
5 Things to Do When You Are Not Happy With Your Life Insurance
Using free-look period
Lapsing term insurance plans
Buying additional riders
Surrendering ULIP & Endowment policies
Converting ULIP and endowment plans into paid up plans
So, there you have it – 5 things you must do when you’re not happy with your life insurance policy?
Now, let’s get to understand these 5 things in greater details! Shall we?
1. Make Use of Free Look Period
IRADA allows new policy holders a period of 10-15 days to terminate their life insurance contract and get a refund, if they aren’t happy with any aspect of their life insurance policy. This period is referred to as the free look period. If you too think your new life insurance is not what you wanted, you don’t need to grin it and bear it. You can actually return your policy, without getting penalized for the same.
All you need to do is to get in touch with your insurer and inform them, in writing, that you wish to get a return your life insurance policy. The company will then return your premium after deducting expenses incurred in the medical test and the stamp duty. Remember, it is better to return your policy and get the refund during the free look period, than to wait for the complete year to lapse the policy by not continuing to pay the premium.
2. Your Exit Plan for Term Insurance
Okay, here’s the deal! Term insurance plans are becoming increasingly popular amongst insurance seekers in India and worldwide. All thanks to growing awareness and the pocket-friendly premiums of term life insurance products. More and more people now feel confident in buying term life insurance products. But did you know most term life insurance products do not have an option for surrendering the policy? Yeah! That is true. If you choose to exit your term insurance plan, you will end up losing the corpus paid towards your premiums. So what should you do if you are not happy with your term insurance plans? Well, you have two options here; exit the policy during the free-look period or let the policy lapse by not paying the annual premium payment.
3. Time to Ride the Benefits of Riders
There could be end number of reasons for you to be unhappy about your life insurance plan, maybe you aren’t happy with the policy features or are disappointed by the low sum assured. In such cases, you may buy an additional rider to supplement your existing life insurance plan. Wouldn’t be that extra burden on your pocket? Yes! It will cost you some extra money, but it will save you from all the hassles of returning your policy, finding a new policy and the wastage of your valuable time in between. Buying a rider will help you strengthen your life coverage and will get you a host of other benefits ensuring a comprehensive and wholesome protection for you.
4. Surrender Your Endowment and ULIP Policies
Surrendering your policy is one of the best ways to voluntarily terminate your polices. Usually endowment and ULIP plans have a lock-in period of three years and the policy surrender facility is available only after the completion of three policy years. If you choose to surrender your policy in the first year itself, you wouldn’t get any returns. Upon the completion of the lock-in period, you would get the surrender value, which is calculated basis the premiums paid by you. Be advised, you may be charged surrender charges and fund management charge, in case you are surrendering the policy in the third year. However, as per the rules stipulated by IRDA, your insurer wouldn’t charge you the surrender and fund management charges, if you choose to surrender the policy after completing 5 policy years.
5. Converting ULIP and Endowment Plans Into A Paid-Up Policy
The concept of paid-up policy could be a boon for you if you aren’t really happy about your ULIP or endowment plans. If you just stop paying the premium, without surrendering the policy, your policy acquires a paid-up status. Here, the policy doesn’t lapse and continues till the maturity. However, the benefits available with the policy are reduced proportionately depending upon the number of years for which you have made the premium payments. Insurers are not liable to pay any bonuses in case your policy acquires a paid-up status. But you will get all the bonuses given before your policy acquires the paid-up status.
In the End!
Always choose to invest in a life insurance policy after a careful assessment of your present financial situation. Remember to select the life insurance plan keeping your long-term financial requirements in your mind. Do well to calculate how much life insurance you actually need. When in doubt, it makes sense to consult an insurance expert or calculate your life insurance needs using life insurance calculators. Lastly, don’t forget to compare different insurance options before you zeroing in on the policy that best suits your requirement, budget and lifestyle.
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