* I want to cancel a life insurance policy which I bought three months before but the company says free-look is complete. I was out of the country for more than two months. What should I do?
As per contract, free-look is allowed if specific request to cancel the policy is made within 15 days of receipt of policy document. However, you can represent to the company with proof that you were abroad, and request for special consideration.
* How much charges are there for unit-linked insurance policy (Ulip) and are these higher as compared with mutual funds?
—P S Krishnan
The charges depend on the type of Ulip product one is buying. In comparison to mutual funds, the charges are higher for Ulips in the short run. However, over a 10-year horizon the charges under most Ulip policies are lower than that on mutual funds. Also, returns on mutual funds attract LTCG tax while Ulip returns are tax free.
* My life insurance policy will mature after two years. Can I surrender the policy and get the money?
Yes, you can apply for surrender. However, the surrender charges will be higher and therefore if the policy has a loan feature, you could opt for it. Any unpaid loan will be adjusted with maturity value and balance will be paid to you at the time of maturity.
* Is monthly payout of `10,000 for 10 years under Pradhan Mantri Vaya Vandana Yojana (PMVVY) taxable? Is it taxable at source? How does it compare with investment in mutual fund liquid scheme?
—Padmanabh R. Merchant
Monthly income from PMVVY is taxable and this is deductible in the hands of the individual and not at source. The investment in PMVVY comes with a sovereign guarantee on the interest rates for a duration of 10 years while an investment in liquid schemes of mutual funds offers higher liquidity at a low level of risk but no guarantee on interest rates.
* I want to redeem my units from Ulips. Will I get the NAV of the same day when I put request for redeeming?
If the request is received by the insurance company before 3 pm then the same day’s NAV will be applied, else the next day’s NAV will be applied.
The writer is ED & CEO, Reliance Nippon Life Insurance. Send your queries to firstname.lastname@example.org