Balaram purchased a Unit Linked Insurance Policy on 1st March, 2015 from ABC Insurance Company. The policy includes both term insurance coverage and estimated investment returns. He took the policy for tax deduction purp

CS Professional · Insurance - Law & Practice · PYQS · December 2022
Balaram purchased a Unit Linked Insurance Policy on 1st March, 2015 from ABC Insurance Company. The policy includes both term insurance coverage and estimated investment returns. He took the policy for tax deduction purpose under Sec. 80C of the Income Tax Act, 1961. In January, 2017, his financial advisor suggested him an annuity plan which comes under Sec. 80CCC of the Income Tax Act, 1961. Balaram is totally convinced with the annuity plan and wants to discontinue the Unit Linked Insurance Policy as paying premiums for both the plans is difficult for him. He approached the insurance company to claim the fund value from the premiums he had paid from March, 2015 to January, 2017. If he revives the policy within two years, can he get the fund value?

Answer & Explanation:

No, he cannot get the fund value even if he revives the policy within 2 years. As per IRDA Regulations, the funds are moved from active ULIP fund to Discontinuance fund and remains the discontinuance fund till the completion of the 2 year period given for the customer for exercising the option of revival. In short, no benefit can be paid to the policy holder under ULIPs till completion of 5 years.

Topics: Life Insurance

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