How to Withdraw ULIP Policy?

ULIPs, or Unit Linked Insurance Plans, are one of the most preferred financial plans for investors looking to invest in both market-linked investments that meet their financial goals and insurance policies that provide them with full life coverage. But as ULIPs are long-term plans, full benefits can be reaped only after the completion of 5-year lock-in period. However, to add flexibility to the plan, an investor can withdraw the corpus amount if and when required, per the insurance company's terms and conditions.

Read more
Best ULIP Plans
  • Guaranteed Tax Savings

    Guaranteed Tax Savings

    Under sec 80C & 10(10D)
  • savings

    ₹1 Crore

    Invest ₹10k Per Month*
  • Zero LTCG Tax

    Zero LTCG Tax

    Unlike 10% in Mutual Funds

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Top performing plans with High Returns*

Invest ₹10K/month & Get ₹1 Crore returns*

View Plans
Please wait. We Are Processing..
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp
We are rated
58.9 million
Registered Consumers
26.4 million

To clarify the doubt of "How to withdraw ULIP policy?" let us understand the withdrawal policy under ULIP in detail.

How to Withdraw ULIP Policy?

Once a ULIP plan is subscribed to as per the requirements of the investor, the premium amount gets distributed between insurance coverage and capital market funds. 

Investing in various units of capital market products is done on the basis of their stated value at the time the policy is purchased. In the case of an emergency, if one must withdraw the ULIP amount, some of these units get liquefied.

With consideration of a few terms and conditions, one can avail themselves of the perk to partially withdraw a ULIP amount even before the policy matures. 

Although depending on the company's policies, any amount can be withdrawn from the ULIP policy. It must be known that too much withdrawal of the ULIP amount may terminate the policy. Therefore, keeping sufficient funds to cover the costs of your ULIP plan is highly recommended.

In cases where top-up payments are made along with the premiums, the withdrawal settlement is made from these payments first and later from the base fund value. Also, if the full tenure of top-up payments is not fulfilled, then withdrawals are only made from the base fund.

Types of ULIP Withdrawals

  1. ULIP Withdrawal Before the 5-Year Lock-In Period

    As per the Insurance Regulatory and Development Authority of India (IRDAI) rules of 2010, the minimum period to get eligible for liquidation of ULIP amount was increased from 3 years to 5 years.

    This was done to get maximum benefits from these long-term investment instruments. This also means that to withdraw the ULIP amount, a minimum five-year period of the plan should be completed.

    It is important to note that no fund liquidity is allowed if the plan is surrendered or discontinued before the completion of these 5 years.

  2. ULIP Withdrawal After a 5-Year Lock-In Period

    Once the lock-in period is completed, ULIP fund liquidation is allowed as per the withdrawal limits on ULIP amounts by the insurer. 

    In general, the top-ups paid, along with the periodic premium amounts, are the first to get withdrawn when requested by the subscriber. 

    When the top-up amount is depleted, or if no such amount is available, the value of the based fund is allowed to liquidate.

Impact of ULIP Withdrawals on Life Coverage

The impact partial withdrawals have on life insurance coverage depends on the amount the investor withdraws before the two-year term of their demise. In this case, the use of the partial withdrawal feature will decrease the sum assured under life insurance.

On the other hand, if the investor withdraws a ULIP amount more than two years prior to their demise, the sum assured under the life insurance will remain the same.

Limits on ULIP Withdrawals

Depending on the company, a few limits are imposed on the ULIP withdrawal amount, which can be as follows:

  • ULIP withdrawals can be made only after a 5-year lock-in period with regular payment of all premiums during these years.

  • Once applicable to partially withdraw a ULIP amount, the typical withdrawal limit is up to 10% of the total premium amount, which may go up to a maximum of 20% of the premium.

  • In the ULIP policies of some companies, a limit on the remaining fund value (e.g., 1/3 of the annual premium must remain) post-withdrawal may also exist.

  • Some companies may have a mandatory limit of one year's premium as the remaining amount in the fund post-withdrawal of the ULIPs.

  • Some companies may also impose limits on the number of withdrawals that can be made before being charged a fee.

  • Withdrawals from the ULIP policy are only permitted if you are over the age of 18.

Points to Keep in Mind Before ULIP Withdrawals

Nothing can come close to well-informed decision-making. Let us know a few of the important points to keep in mind before a ULIP withdrawal.

  • As the partial withdrawal of the ULIP amount reduces the corpus sum, the ULIP policy withdrawal must be made only in emergencies.

  • Before making any ULIP withdrawals, make sure you completely understand the rules.

  • To take advantage of the partial withdrawal feature, ensure your premiums are paid on time.

  • It is recommended to leave enough base funds to cover the life coverage and account maintenance needs.

  • The fund value starts at a very low value, which increases over time. So, it is important to consider partial withdrawal after a sufficient period.

On a Final Note!

When faced with a financial emergency, the flexibility of partial withdrawal of the ULIP plan is very beneficial. However, it does impact the plan's structure and benefits for the nominee. Before making such decisions, an investor should consult with financial experts and understand this important query of "How to Withdraw ULIP amount?" holistically to avoid any negative consequences and to reap the benefits of this policy.

Grow your wealth & meet your Financial goals

Systematically Invest in high growth plans with returns upto 18%*
View plans
Standard T & C Apply*
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Invest more get more
capital guarantee
Investment Calculator
  • One time
  • Monthly
/ Year
Sensex has given 10% return from 2010 - 2020
You invest
You get
View plans

Ulip plans articles

Recent Articles
Popular Articles
What is NAV in ULIPs?

28 Mar 2023

ULIPs offer the dual benefit of life coverage and investments
Read more
ULIP Plans for Child Education

16 Mar 2023

In a world full of uncertainties, securing the future of
Read more
Whole Life ULIP Plans

16 Mar 2023

Imagine your future and where you want to be in a few years
Read more
Tata AIA ULIP Plan Calculator

07 Feb 2023

A Tata AIA ULIP Plan Calculator is a premium and returns
Read more
Difference between ULIP and Traditional Plans

03 Feb 2023

ULIP or Unit Linked Insurance Plan offers two options to a
Read more
ULIP Calculator
A ULIP calculator is a specifically developed tool which helps the insurance buyers to calculate the premium
Read more
ULIP Fund Returns
ULIP or Unit Linked Insurance plan  provides a combined benefit of investment and life cover. According to the
Read more
7 Things to Know About the Tax Benefits of ULIPs
Nowadays, Unit Linked Insurance Plans, i.e., ULIPs, have evolved as the popular income tax saving investment
Read more
SBI Life Smart Privilege Plan - All You Need to Know About Benefits & Features
One of the most trusted life insurance companies in India, SBI Life has recently come up with a new SBI Life
Read more
11 ULIP Charges You Should Know About
Unit-Linked Insurance plan (ULIP) offers dual benefits of insurance and investment. Unlike traditional insurance
Read more

  • Zero% commission
  • No hidden charges
  • Expert Advice
  • 100% calls recorded
Invest ₹10k/month Get ₹1Cr
Tax free on maturity*
Mobile +91
*T&C Applied.
Download the Policybazaar app
to manage all your insurance needs.