The world that we live in has completely changed over the last one year. We have changed the way we live our lives. The idea of uncertainty of life has dawned on us like never before with almost 70 million people falling sick due to the deadly virus and almost 1.7 million of them succumbing to it. ^[1] These new circumstances have also changed the way people look at insurance and investment. With this uncertainty looming large, it is necessary for everyone to ensure no matter what happens tomorrow, your future, and that of your family, is secure.

When it comes to securing your family's future, life insurance is a must, especially in times like these when there are no guarantee about whether you would be there to take care of them yourself. However, a simple life insurance plan only provides risk cover with no returns. An effective alternative is a Unit-Linked Insurance Plan, or simply ULIP. ULIPs were launched as an investment option that also offer the benefits of a life cover. These market-linked instruments allow the policyholder to earn market-linked returns while providing cover to secure his/her family's future.

ULIP policies come with a minimum lock-in period of five years. However, due to circumstances beyond control, there can be instances where the policyholder may not be able to continue with their ULIP investment. Here are the different possible scenarios:

Discontinuation of premium payment during the lock-in period

As previously mentioned, a ULIP has two components: investment and insurance. Upon expiry of the grace period, in case of discontinuance of policy due to non-payment of premium during the lock-in period of five years, the policy will automatically be converted to a "Discontinued Life Policy" and the life insurance cover would be discontinued with fund value being transferred to Discontinued Life Policy fund after deducting the discontinuance charges. However, revival is allowed for a predefined period of 3 years from the date of first unpaid premium. A notice would be sent to the policyholder to revive the policy by paying the due premium. In case the policyholder does not want to revive the policy within the revival period, the policy shall continue without any risk cover, and the policy fund shall remain invested in the discontinuance fund. At the end of the lock-in period, the proceeds of the discontinuance fund shall be paid to the policyholder and the policy shall terminate. You, as a policy holder,also have an option to surrender the policy anytime and proceeds of the discontinued policy would be payable at the end of the lock-in period or date of surrender, whichever is later.

Discontinuation of premium payment after lock-in period

Upon expiry of grace period, in case of discontinuance of policy due to non-payment of premiums after the lock-in period of five years, the policy will be automatically converted into a reduced paid-up policy with the paid-up sum assured. The insurer would inform the policyholder about the status of the policy and request him/her to revive it. The policyholder can do so by paying the due premium. Alternatively, he or she can intimate the company to completely withdraw from the policy without any risk cover and benefits and receive the surrender value that is the fund value under the plan as on the date of surrender request. Your policy will terminate after the insurer pays the surrender value.

One must note that the maximum benefits of a ULIP investment can be reaped only by staying invested till maturity. Since these plans fulfil one's need for both investment and protection, it is not advisable to discontinue them. So if you fail to pay the premium on time due to financial or other difficulties, try to revive the policy before the stipulated deadline.

Which ULIP policy to choose?

If you are looking for a ULIP plan for yourself, you may consider Bajaj Allianz Life Smart Wealth Goal, which lets you choose from five investment portfolio strategies and eight fund options depending on your need and risk appetite. The plan offers you the flexibility of reducing the prevailing regular or limited premium by up to 50% of the prevailing premium after the first five policy years subject to policy terms and conditions^#. This way, you could continue the policy with reduced premium even if you are facing some financial difficulties. Moreover, this ULIP plan helps you to accelerate your journey towards life goals by returning life cover charges at the end of the policy term if all due premiums have been paid*.

Because of the multi-dimensional ULIP benefits, you can consider adding them to your investment portfolio to balance your insurance and investment needs. It could serve as a one of the preferred insurance cum investment solutions for your family's financial security and your long-term financial goals with the added tax benefits on investment as well as maturity serving as a cherry on the top.

Source -

[1] https://www.worldometers.info/coronavirus/

# subject to product terms and conditions

*The Death Benefit payable is equal to the Sum Assured under the policy subject to the Guaranteed Benefit of 105% of the Total Premiums\ paid, till the date of death.