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Stuck with a life insurance policy? Here are your options

What you need to do if your current life insurance policy is proving to be of no benefit at all. Follow the steps to find the exit door of your policy and start a policy that works well and offers you financial benefit.
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Purchasing a life insurance policy is not a small decision. In fact, it is one of the most important decisions you can take during your lifetime, and also one which has the power to have a significant impact on the lives of your loved ones. Life insurance is essentially a long-term contract between an insurer and the insured which involves the insurer providing life insurance protection to the insured for a specific period. The cost of getting life insurance cover is known as premium which is to be paid by the insured based on a pre-decided mode or frequency.

Major Reasons Why People Buy The Wrong Insurance Policy

When it comes to purchasing alife insurance policy, plenty of information already exists on the topic, which most insurance buyers do take into account before buying a policy. However, there are also many others who end up buying a policy that is unfit for them and their needs. The best example of this is the tax season when people make a beeline for buying insurance policies to save on tax, without giving much thought to their needs. Due to this, they often end up buying a policy which they may be of little, to no use to them.

Another major reason why people end up buying the wrong insurance policy is due to mis-selling by insurance agents. Often people take help from an insurance agent who assists them in selecting the right policy. These agents are usually associated with a particular insurer, and end up pushing policies which would get them the most commission. In doing this, they tend to sell the wrong type of policy to a buyer, who is least likely to get any benefit out of the policy.

In addition to this, people also tend to buy life insurance based on a friend’s or family member’s recommendation, someone who may have benefited from the policy. However, one must always remember, that because no two individuals are the same, their needs and requirements will not be the same either. And this is the reason why, the same policy might be highly suited for one individual, while for another, it may be completely useless.

Now, the topic in question is, if you have purchased the wrong life insurance, what options do you have to get out of the situation? There are actually, not one, but five options that you can choose from, depending on the type of insurance policy that you have taken. Read on to find out.

Amp up the coverage of your plan

If your insurance plan is unfit because it provides insufficient coverage, you always have the option to increase plan coverage. This can be done easily, by purchasing a second plan which will help make up for the gap in coverage and provide you with the amount of sum assured that is adequate for your needs. When buying additional life insurance coverage, it is important to keep in mind that different types life insurance plans charge different premiums. Considering this, it is often most recommended that if you are looking to get additional coverage on an existing life insurance policy, it is ideal to go for a term insurance plan, which offers a high amount of cover at an affordable cost.

Another option which you can consider to increase your plan’s coverage it to take add-on covers. Add-on covers or riders are designed to provide added cover for risks which may not be covered under the policy such as critical illness, accidental death, etc.

Halt your premium payments

If you have a term insurance plan, you would be well aware that these plans do not offer any survival benefit. They also don’t do not accumulate cash value. Therefore, if you have a term insurance plan which is not suited to your needs, you have 2 options. First, you can discontinue premium payment on the plan which will cause your plan to lapse automatically after a certain period. The other option is applicable only if your plan is still in its free-look period. In this case, you can place a request to return the plan, following which, you will receive a refund of the premiums which you have already paid towards the plan, after the deduction of certain charges. If your plan is not in the free-look period any more, you can also discontinue the plan by not paying the renewal premium.

Surrender the policy

Besides a term plan, most other types of life insurance plan offer policyholders the option to surrender their policy. Policy surrendering basically means that if the policyholder terminates their policy before it reaches maturity, the insurer will pay the former the cash value which the policy has acquired during the period it was active. This cash value is known as policy surrender value. So, for instance if you have an endowment policy or a ULIP (unit-linked insurance plan), both of which have surrender value, then you can exit the policy by surrendering it to the insurer.

Once you have surrendered the policy, the insurance cover shall cease and the insurer will provide you the surrender value which your policy has accumulated over the years until surrender. Also remember that insurers have certain terms and conditions for policy surrender. A policy will typically have to have been active for a certain number of years, with all due premiums paid in full for the term, before it can be surrendered.

Make the most of the policy’s free look period

If you have purchased a policy which you soon realize (after having bought it) that it is not suited to fulfil your needs, you can return it and get your money back. Keeping the interests of life insurance policyholders in mind, IRDAI (Insurance Regulatory and Development Authority of India) has made it mandatory for insurers to provide a 15 day free look period on all policies. The concept of free look period is applicable to life insurance and health insurance policies. The free look period begins from the day that the policyholder receives the policy document. To cancel or return a policy during the free look period, the policyholder must put in the request to return the policy in writing, to the insurer. Following the receipt of the request, the insurer will then proceed to refund you the value of premium which you have paid towards the policy after making certain deductions such as proportionate risk premium for the cover period, stamp duty charges, medical examination charges, etc.

Convert to a paid-up policy

If you have an endowment insurance policy or a ULIP, and wish to exit the plan, you can do so by converting your policy into a paid-up policy. Utilizing this option will depend on whether or not your insurer has given you this option on your policy. What is a paid-up policy? A policy acquired the paid-up status if the premiums have been paid for the minimum number of years and discontinued thereafter. In this case, the policy will continue till it reaches maturity, but the benefits payable under the policy will be reduced in proportion to the premiums that have been paid. If you have an endowment plan, you must make annual premium payments for a minimum number of 3 years (5 years for ULIPs) to be eligible to convert your policy into a paid-up one.

Stuck with a life insurance policy? Here are your options Reviews

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  • LIC Life Insurance
    "Average"
    0.5 3.0/5 "Satisfactory"
    I have chosen 2 policies, long term and money back. LIC is good but they will provide the information only If I request them. Paying monthly 2500 rupees through ECS. I did not see any benefits and have no access for online. Every 5 years once they are giving bonus on the money back plan.
    Was this review helpful? 0
    , hosur
    Reviewed on Jan 14, 2019
  • LIC Life Insurance
    "Good policy"
    0.5 4.5/5 "Excellent!"
    I have taken 4 policies with LIC from long back. Its a mixed of endowment, money back and life insurance policy for family. I am satisfied with the benefits. If there is any problem I can manage the account online. I pay the premium by cash or cheque, its hardly around 1300 or 1400 rupees every quarterly and also monthly premium has been done.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 14, 2019
  • LIC Life Insurance
    "Good policy"
    0.5 5.0/5 "Blown Away!"
    I have a life insurance policy with LIC and it was taken almost now 10 years through an agent. The tenure period is 21 years and its a JEEVAN ANAND. The benefits are quite good. I never contacted the customer service, I go through with an agent. I make the premium through online every quarter.
    Was this review helpful? 0
    , thiruvananthapuram
    Reviewed on Jan 14, 2019
  • HDFC Life Life Insurance
    "Very Good Service"
    0.5 4.0/5 "Great!"
    I had taken this insurance policy almost five years back and i had been paying the premium on an annual basis. The premium amount was not too high and the payment method has been easy as well. There has not been any issues faced with the services of them so far.
    Was this review helpful? 0
    , coimbatore
    Reviewed on Jan 13, 2019
  • LIC Life Insurance
    "Good for me and for my nominees"
    0.5 4.0/5 "Great!"
    I have purchased Jeevan anand policy with LIC, my policy has the tenure period of 20 years. As per my policy I need to pay the premium for 15 years, I make Rs. 30,000 per annuam. At last I get the premium cover upto Rs. 20 lakhs and one other good benefits even after the policy expiry there is a maturity benefits of 14 lakhs will provide to the nominees for certain demise its good. But I suggest they need more improvement on the customer support,
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 11, 2019
  • LIC Life Insurance
    "Trusted Insurance Company"
    0.5 4.0/5 "Great!"
    It was taken the policy with LIC in month of 2014, they have good reputation and my relative is working as an agent. To secure my family I took this policy, the policy which I am holding it for 25 years, I will be getting the maturity after the tenure period.
    Was this review helpful? 0
    , kolkata
    Reviewed on Jan 11, 2019
  • LIC Life Insurance
    "Good Investment"
    0.5 5.0/5 "Blown Away!"
    Agents are professional in LIC, and they have flexi in the payment options. I have Jeevan anand policy it has the term period of 15 years, I need to pay the premium for whole year after 24 years I get the return value also they provide life coverage.
    Was this review helpful? 0
    , dandeli
    Reviewed on Jan 10, 2019
  • LIC Life Insurance
    "Good Policy to take"
    0.5 4.0/5 "Great!"
    LIC is providing lots of tax benefits policy hence i have chosen the policy with them. I have taken the Jeevan Anand policy. I used to make the premium amount through online. I'm very much satisfied with the sum assured amount. Total tenure period of the policy is 15 years.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Jan 10, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 3.0/5 "Satisfactory"
    I have money back policy policy with LIC, it has premium of Rs. 10,000 per annum. It gives the maturity benefits after 20 years of the tenure period, I used to get the bonus amount around Rs. 40,000 for every five years it has the tax benefits too.
    Was this review helpful? 1
    , malda
    Reviewed on Jan 10, 2019
  • LIC Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    It has been a good policy and i had started this insurance a long time back. The premium amount has not been not too high and i have been paying it annually where the payment method has not been high. The policy is good and can be suggested to others.
    Was this review helpful? 0
    , pune
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Average Policy"
    0.5 4.0/5 "Great!"
    Purchased my life insurance policy with Life Insurance Corporation of India. I have selected the LIC because of the wife's suggestion. I have chosen the Jeevan Bhima policy. I am paying the premium amount of Rs. 30000 every year. I have no idea about the coverage value. I make the premium through agent via money transfer.
    Was this review helpful? 1
    , new delhi
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Better to invest"
    0.5 5.0/5 "Blown Away!"
    I have a money back policy from LIC which was taken before 10 years through an agent. Every 4 years once they are providing good benefits like bonus points. The agent was very helpful. I got the insurance paper. I am paying the premium every quarterly 1000 rupees through online.
    Was this review helpful? 1
    , pondicherry
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Benefits part should be increased"
    0.5 2.0/5 "Expected more"
    I have term insurance with LIC, they give the life coverage to the nominees, they have option to add multiple nominees. I have taken it for 20 lakhs hence I need to pay the premium around Rs. 7000 per annum, the draw back with this policy they wont provide paritial amount to the holder.
    Was this review helpful? 0
    , thrissur
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Good Bonus Policy"
    0.5 4.0/5 "Great!"
    LIC is national insurance company and it has the good reputation. I have taken the policy called money back policy, it has maturity period around 15 to 20 years, I used to get bonus amount every 3 years or 5 years, they have tax benefits and other facilities.
    Was this review helpful? 1
    , thrissur
    Reviewed on Jan 09, 2019
  • ICICI Prudential Life Insurance
    "Average Policy"
    0.5 3.0/5 "Satisfactory"
    My life insurance was bought from ICICI prudentuial. One of my friend who is working over there has recommended me about this policy. I paid the premium amount of Rs. 25000 annually. I have paid the premium for 2 years after that i have discontinued the policy due to the personal reasons. I have to pay the premium for 7 years actually.
    Was this review helpful? 1
    , tiruchirapalli
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Its Good"
    0.5 4.0/5 "Great!"
    I have taken some policy with LIC, I could not recall the name of the life insurance. But it has the term of 15 years, I need to pay only for 10 years, I get the coverage for whole year. They are providing tax benefits with the life insurance premium and it has life coverage.
    Was this review helpful? 1
    , bangalore
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Not satisfied"
    0.5 2.0/5 "Expected more"
    I have my life insured with LIC from last 15 years and it is a long term policy. I pay my premium once on 6 months through direct payment and i am convenient with the payment options. I am not happy with the returns and tenure period for this policy is for 25 years.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Trusted Insurance"
    0.5 5.0/5 "Blown Away!"
    They saving our money and providing the loan based on the premium but we need to maintain proper track record for the LIC. I have taken the policy for the tenure of 25 years, I need to pay the premium for whole year I expect good value from my three policy.
    Was this review helpful? 0
    , cuddalore
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Life Saving Policy"
    0.5 5.0/5 "Blown Away!"
    My life was insured with Life Insurance Corporation of India. I have purchase a plan called Jeevan Bhima Yojana. Since my father is paying the premium, I'm not sure about the amount. This is a 20 years tenure period policy. I never had any trouble with this policy.
    Was this review helpful? 1
    , chandigarh
    Reviewed on Jan 08, 2019
  • LIC Life Insurance
    "Good service"
    0.5 5.0/5 "Blown Away!"
    I have been holding my life insurance with Life Insurance corporation of India,i took this insurance long bank , the agent had explain me clearly about the policy coverage and plan benefit,and i pay premium on quarterly basis, i pay up to 2700-2800 rupees which was nominal for me,it use to get auto debited from my account.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 08, 2019
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