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

Rohit Menon, 35, is a salaried employee. His ULIP has a fund value of Rs 4,00,000 and the policy is within the five-year lock-in period. He wants money now. What is the correct position for a ULIP under the regulatory framework in India?

A ULIP carries a mandatory five-year lock-in under IRDAI rules, so partial withdrawals are permitted only after that period. Before it ends, the policyholder cannot freely withdraw units, and surrender proceeds are paid only after the lock-in through the discontinued fund.

  1. AHe can withdraw the full fund value at any time without any condition
  2. BPartial withdrawals are permitted only after the five-year lock-in period endsCorrect
  3. CHe can only receive the money if he dies
  4. DThe lock-in applies only to the mortality charge and not the units

Explanation

IRDAI rules require a five-year lock-in for ULIPs, so partial withdrawals are allowed only after it. Surrender before this moves the fund to a discontinued policy fund and proceeds are paid after the lock-in, so withdrawal on demand is wrong.

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