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Some time people realise that the policy that they have got in their hand is not what was explained to them or it's not what they have understood and some people who have bought policies about five-ten years ago realise that now they do not want to continue with these policies. So, one needs to understand the options clearly because life insurance contracts are long-term in nature and there are lots of restrictions at the time of withdrawal. Let me take it on a case to case basis:

 

(1) If a person who has bought a fresh policy and the document has been delivered to him. Every insurance policy has a clause of 15 working day free-look period and within this free-look period he can return the policy back to the insurance company and the insurance company is bound to give the full refund of the premiums that has been paid subject to a couple of deductions like stamp duty that has been paid on the policy, the cost of medical test which the company has incurred and the premium for the number of days he has provided cover with. In case of a unit linked insurance policies (ULIP) policy the net asset value (NAV) as on date of returning the policy is to be paid minus all the expenses. So, this is in case one has bought a fresh policy and the document has just landed in his hand.

 

(2) If one has a traditional policy bought earlier on. In traditional policies, one has to pay premium for at least three years. If one haven't paid premiums for three years, all the money that has been paid gets forfeited and nothing comes at a time of closing the policy. In case premiums have been paid for more than three years then there are two options available;

(a) stop paying any further premium to the policy. The benefits that have been accrued in the policy gets freezed as on that date and the payout happens when the original maturity was scheduled to be, for example he had a policy for 20 years, paid premiums for five years and then stopped making any premium payments but all the benefits accrued from five years will be kept as it is and given at the end of 20 years. In case he do not want to wait for that number of years then there is an option to surrender policy back to the company and the company after deducting certain charges, which are pretty heavy in nature, he gets the money in hand immediately.

(3) Talking about united linked insurance policies. If a person has bought a policy before September 1, 2010 then he can go back to the insurance company, ask for surrendering the policy and the company based on the current NAV minus the surrender charges will refund the money straight in hand. In case if the policy has been bought after September 1, 2010 then there a minimum locking period of five years. So, one can stop making the premium payment and even if he has made just one premium payment then he does not have to make a payment for five years. The money gets transferred into the policy discontinuation fund and the insurance company is entitled to deduct maximum of Rs 6,000 from that fund. The balance amount will remain in the policy discontinuation fund and be given at the end of five years, which is a minimum lock-in period. In the interim period one gets an interest at the rate of what the savings bank account holder of a State Bank of India gets, which his currently 4 percent.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief '96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online