Investment Plans 439 views August 19, 2021

A unit-linked insurance plan helps people grow their money over a definite investment period and protect their loved ones by providing them a combination of insurance and market-linked returns. Premium Redirection is one of the key features in ULIPs that people use to create a corpus over the policy term.


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In ULIPs, insurers put the premium amount (paid by the policyholder) in equity, debt, or balanced funds so that the money grows over a fixed policy term. Suppose a policyholder is uncertain about the market conditions and wants to redirect his/her future premium amount to a different fund option in an alternate proportion. With the premium redirection feature, a policyholder can do the same after the completion of one policy year.

Let’s read further to know more about the premium redirection feature in ULIPs.

Let’s Check the Details of Premium Redirection Feature in ULIPs

For a better understanding of the premium redirection feature, it is important you know in-depth about the fund switching facility too.

With the fund switching facility, insurers allow policyholders to partially or fully switch the fund between different available fund options (in a particular ULIP) during the policy year to protect or enhance their investment. Let’s understand it with an example.

Suppose an individual has invested 100% of his money in equity funds. Now, he wants to switch to a balanced fund with an allocation of 60% in equity and 40% in debt. With the fund switching feature, he can do the same up to a fixed number of free switches in a policy year. After crossing this limit, the insurer asks for a fund switching charge ranging from INR 100 to 500 (varies from one insurer to another).

What is the Difference Between Fund Switching and Premium Redirection?

Rebalancing your past investments is known as a fund switch. While for changing or redirecting your future investments, you can use the premium redirection feature. The example below can give you a clear understanding of the difference between them.

Suppose an individual has decided to invest 30% of his money in debt and the remaining 70% in equity funds. With a fund switch, he wants to increase his invested money in debt funds. So, the insurer will move 10% of his investment from equity to debt fund. The new investment allocation will be 40% in debt and 60% in equity funds.

Now, after a few months, the same individual wants to redirect 60% of his money in debt funds with the premium redirection feature. The premium invested earlier will remain in the same fund as chosen. However, all the future premiums will be invested in 60% debt and 40% equity funds as per his preference.

When Should You Use Premium Redirection?

A policyholder should opt for the premium redirection when he/she wants to change the way premiums are being invested in the plan. With the premium redirection, you can ensure the long-term performance of your ULIP. A policyholder can opt for the premium redirection before the due date of the next premium. Redirecting your premium will not impact your current premium and is not chargeable up to a specified number of times (changes from one insurer to another). After crossing the limit, you will need to pay the charges.

How to Redirect the Premium of Your ULIP to a Different Fund?

Insurers allow you to redirect the premium of your unit-linked insurance plan to a different fund through the following ways.

  • With your online account (Login to your account and choose the premium redirection feature to complete the process)
  • Fill the premium redirection request form and submit it to the nearest insurer’s branch
  • Send (via email) a scanned copy of the properly filled premium redirection request form to the insurer from your registered email ID

Note: After receiving your request, the insurer generally takes 2-4 working days to process the same. Once it is redirected successfully, you will get a confirmation message.

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