How to revive lapsed Ulip?

New Delhi | Published: November 7, 2018 12:15:25 AM

Ulips and mutual funds are two different financial instruments and can cater to different financial goals of an individual.

Pay your balance premiums to revive lapsed Ulip

By Pankaj Razdan

I bought a Unit-linked insurance plan (Ulip) five years ago and paid only first premium of Rs 50,000. The policy has lapsed and the company is asking me to pay balance premium of Rs 2 lakh to continue getting policy benefits or else close the policy and take the surrender value without any benefits. Should I pay the balance premium to avail the policy benefits or take the surrender value and invest in mutual funds?
– Deepak Kumar
Ulips and mutual funds are two different financial instruments and can cater to different financial goals of an individual. It is important that you first evaluate your requirements and financial needs before opting for one. However, in your case it is advisable that you continue with your Ulip policy by paying the balance premium, as an investment will only show results when you are patient with it and give it some time.

I want to buy a life insurance policy for my sister who is a single mother and pay the premium every year. What type of a policy should I buy as she has a daughter who is 10 years old?
—Rajesh Kumar
You can purchase a life insurance policy for someone else only if you have consent and insurable interest. Insurable interest means that you would be adversely affected financially in case something unfortunate happens to the person. In this case, since your sister’s life will not impact your financial condition, you do not have any insurable interest in her. So, you will not be able to purchase a life insurance plan on her behalf.

I bought a term policy for Rs 25 lakh when I was 25 years old. Now I am 45 with a 15-year-old son and wife. I want to increase the sum insured to Rs 1 crore. Is it advisable to do it?
—Ravi Singh
A term policy is one of the most cost effective methods to mitigate risk, safeguarding your major financial commitments and is a must for any earning individual. Opt for a new life insurance plan with increasing sum assured that will increase your insurance cover every year by a said percentage. Evaluate your annual income, medical condition, lifestyle and future financial requirements to opt for adequate sum assured, ensuring that your policy always remains relevant providing complete financial protection to you and your family.

The writer is MD & CEO, Aditya Birla Sun Life Insurance and Dy. CE, Aditya Birla
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