Is there a time limit for partial withdrawal of money from an insurance policy?


Is there a time limit for partial withdrawal of money from an insurance policy?


Recent IRDA regulations now facilitate you as an insurance policy holder an added opportunity to partially withdraw funds from the invested amount. In a unit linked policy, you can partially redeem up to 20% of the fund value while in non linked policy you can get a maximum of up to 80% of the surrender value. As far as time limit is concerned partial withdrawal is allowed only after completion of 5 policy years. Each insurance company has set a minimum limit for partial withdrawals varying from policy to policy so check with your insurance service provider for the exact time limit.


Hi NMahesh,

ULIPs have a lock-in period of five years. This means it may not be redeemed or surrendered before the completion of five years. Even if you surrender your policy before five years, you’ll only receive the money after the policy actually completes five years. You won’t receive the fund value as per the surrender date. Here’s what happens to the fund value once you surrender your ULIP before the lock-in period:

Your insurer will deduct a discontinuance fee, following which the remaining fund value will be moved to the Discontinued Policy (DP) fund. During this period, a fund management charge is applicable on your fund value. This fee cannot be higher than 0.5% of the amount.
However, the good part is that you’ll still earn interest on the money lying in the DP fund. At present, the interest rate is set at 4% per annum.

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