How to Handle Your Existing Insurance Plans During the Lockdown Time
The lockdown period has been impacting everyone in a million ways. Working from home, ordering essential and paying bills online, staying at home during the weekends, and spending quality time with loves ones are some of the common aspects, we are noticing. People realize quite many things about life.
But life goes on, and we will need to continue handling our finances, especially when it comes to paying insurance premiums. IRDAI (Insurance Regulatory and Development Authority of India) has made an announcement on 23rd March 2020 asking investment companies to extend a grace period of 30 days to policyholders, to pay their annual premium, if the person requests for it.
- Digital Transactions :
- Policyholders can pay the premium online (though many have already been doing it), update their personal information, and make changes to the standing instructions by using the digital platform.
- For any questions and queries, you can contact the investment company by sending them a mail. New policies are being offered and approved online (for life and health insurance). Existing life insurance policy claims can be lodged online, though some companies still require a physical copy of the form.
- Insurance and Investment
- Insurance doesn’t only safeguard your life and cushion your loved ones in case of unforeseen circumstances. It also acts as an investment plan. Many insurance companies offer saving plans that will offer you either a lump sum amount or a monthly/ yearly income or both after the policy ends.
- Unless your policy is going to end, this is not the right time to terminate the insurance policy due to financial restrictions. Continue managing your existing policy and use the grace period offered to pay the premium.
- Managing Unit Linked Insurance Plans
- ULIP is an attractive insurance plan that doubles up as an investment scheme. However, it is different from the investment saving policies offered by insurance companies. A life insurance policy offered by a company will invest your money in its assets and pay you back after the policy ends.
- But in ULIP, the money is invested in various avenues such as bonds, stocks, and mutual funds. ULIP is a market-linked scheme and is subjected to the risks associated with it. If you have a unit link insurance plan that would be expiring soon, this is the time to go for a partial settlement.
- According to the guidelines, there can be a gap of 5 years between the maturity of the policy and the settlement date. Anytime during this period, the policyholder is eligible to withdraw the amount without incurring any settlement charges. With the market fluctuations and uncertainty looming around us, unless you have a financial crunch, it is better not to go for full settlement.
If the maturity date is far away, try not to meddle too much with the investment at this stage. While you might be tempted to get what little you can, before you lose it all, it is not particularly advisable at this point to withdraw the amount from the policy.