Why your Ulip money goes to a discontinuance fund

Unit linked insurance plans (Ulips), which bundle market-linked investment and insurance, come with a lock-in of 5 years. A lock-in means you can’t withdraw from this policy even partially during this time. But what if you plan to discontinue? If you stop paying the premiums and the policy lapses or you choose to surrender (regular or a single-premium plan) even then, the money doesn’t come to you. Instead, it moves to a discontinuance policy fund where it stays until the lock-in period is over. This is how it works.

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