Finance

Understand Waiver of Premium benefit in ULIP

Investing can be an essential aspect of your life. Although you might fear investments, it can be helpful for the growth of your wealth. When you invest on a regular basis, you can build a substantial corpus to meet your life goals in the future. However, you should know the right investment instrument that can not only ensure the growth of your hard-earned savings but also to receive high returns.

Although there are many traditional investment tools like Equity Linked Savings Scheme (ELSS), Mutual Fund (MF), RBI Taxable Bonds, and so forth, you should invest your money in the new-age Unit Linked Insurance Plan (ULIP). A ULIP plan is a long-term investment that can allow your wealth to grow as well as diversify your financial portfolio. Monitoring ULIP performance regularly can allow you to reap benefits in the long run.

Before you purchase a ULIP plan, let’s understand what the premium is in detail for better clarity:

Premiums can be an inevitable element of a ULIP policy. As a policyholder, you might have to pay the premium regularly to ensure that your ULIP policy is active. When you fail to pay the premiums, your insurance company can offer you a grace period of 30 days. If you are unable to repay the unpaid premium amount, your ULIP policy can be terminated.

On the other hand, you can stop your ULIP policy from being terminated even after you are unable to make the payment of the premium. A ULIP policy can provide you with a unique feature called the waiver of premium. Many insurers can provide the waiver of premium benefit either separately or as a part of your ULIP policy. When you avail the waiver of premium ULIP benefit, your insurer can waive the premium off when you might be incapable of paying the premium due to loss of income, physical disability, and so forth.

A waiver of premium feature can be beneficial to your loved ones in your absence. For instance, your insurer can waive the premium after your demise to ensure your children do not have to bear the financial burden to pay the premium regularly. Let’s understand the working of the waiver of premium feature with the help of a better illustration:

Parenthood can come with the financial responsibilities of your children. Until your children are financially settled, you might look after their needs and save a specific amount of money before they reach their milestones. For instance, you might look forward to saving a total amount of Rs. 50,00,000 before your child crosses 20s. During this time, if anything happens to you and you haven’t availed a waiver of premium feature, your ULIP policy would terminate, which can eventually leave your child financially unprotected.

Under such a scenario, if you have a waiver of premium feature after your demise, your ULIP plan would continue. Your insurer would not only pay your children with a sum assured value but also pay the premium themselves at the due date. That way, your children can receive a high fund value amount at the desired age.

In a nutshell, a ULIP policy not only offers a death benefit to your loved ones but also waives the premium during an unfortunate event. While selecting a ULIP policy, you should check with your insurer to ensure that you receive the waiver of premium feature. As the policyholder, you can opt for it either as a rider or an in-built feature. Additionally, you should compare several ULIP plan options with the right amount of benefits and riders before you purchase a final policy for you.

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