Unit Linked Policies provide flexibility to “partially” withdraw some amount of money from your accumulated Fund Value before the policy tenure is over. You will not be allowed to withdraw the whole amount from the fund without surrendering the policy.
However, there are quite a few conditions that need to be fulfilled if you wish to do a Partial Withdrawal from the Fund Value, like:
- You need to be at least 18 years of age.
- Partial Withdrawal is allowed only after completion of 5 policy years and not before that.
- Partial Withdrawal is only allowed if all due premiums have been paid on time and the policy is in-force.
- There is a minimum limit for Partial Withdrawal.
- There is a maximum limit that is also specified in the Policy Document.
- The sum assured decreases for every partial withdrawal made.
Let us understand it with an example:
Raman Shah, has a ULIP where his Fund Value was Rs 3,00,000 at the end of 5 years. His Annual Premium is Rs 50,000. When he wanted to do a Partial Withdrawal from his Fund, he was told that he can withdraw a maximum amount of 20% of his Fund Value and not more than that such that at least 1 years’ premium remains in the Fund.
Thus, Raman could withdraw only 20% of Rs 200,000= Rs 40000 subject to the fact that at least Rs 30,000 remains in the Fund. Thus his Sum Assured also decreases by Rs 30000 which can be restored since Raman is young.
Before you plan to make a partial withdrawal, read the policy document effectively. This is because ULIPs are long term investment plans which will help you gain maximum returns when you follow a consistent and systematic investment process.