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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

A 35-year-old client, Meera, holds a unit linked insurance plan (ULIP) bought five years ago. Which statement about the lock-in and partial withdrawal of a ULIP under the IRDAI framework is correct?

ULIPs have a minimum lock-in of five years, and partial withdrawals are generally allowed only after that period, subject to policy terms. The lock-in is not one year and not absent. It applies to the policy's fund, not only to the mortality charges.

  1. AThere is no lock-in, and units can be redeemed at any time without any condition
  2. BThe lock-in period is five years, and partial withdrawals are generally allowed only after the lock-in endsCorrect
  3. CThe lock-in period is one year, and the entire fund must be surrendered after it
  4. DThe lock-in applies only to the mortality charges, not to the fund value

Explanation

ULIPs carry a minimum five-year lock-in under the regulations, and partial withdrawals are permitted only after it ends, subject to policy conditions. A one-year lock-in or no lock-in is incorrect. The lock-in applies to the policy, not to mortality charges alone.

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