In the present day, I will endeavor to tell my Readers about the methods whereby a policyholder can withdraw his policy. There are two choices, which I describe hereunder in detail:-
1.Surrender of policy at policy-holder’s option.
If the policyholder wishes to surrender his relevant policy, then he will file an application in writing requesting the insurer to withdraw his policy. However, such a policy must be in force for the last two continuous years and if it is less than such a period, then the Corporation/insurer will not allow the policyholder to file such an application as per its law. On receiving such an application filed by the policyholder, the concerned department will work on it and shall pay to the policyholder an amount equal to the surrender value of the insurance within one month of the application. If the policyholder has already taken debt from the department, then the insurer will less such amount due against the former.
Initiation of process on Application
After receiving application for withdrawal of policy from the policyholder, the insurer may contact the policyholder within 15 days. Thereafter, it will communicate him in writing about the benefits of maintaining his policy. It will also offer him to seek professional advice, if appropriate. In such a situation, the insurer will extend period of one month by fifteen days.
However, on preferring an application by the insurer, the Tribunal may issue a written order. The Tribunal may suspend or change the insurer’s liability to make payments. The Tribunal will do so on his satisfaction. It will also see that such suspension or variation will not prejudice to the insurer or policyholder. The Tribunal in its order will also determine the period of its validity and may impose certain conditions.
2.Surrender of policy at insurer’s option.
The insurer has also authority to surrender the policy to the policyholder. A policy, which has acquired a surrender value, insurer shall not surrender other than the request of the policyholder. If the policyholder is under some obligations, the insurer will make less the said amount. If he has already got certain debt and the total amount of dues against the policyholder have exceeded the surrender value of that insured amount, then the insurer may issue a notice in writing to the policyholder setting out the amount owed to the insurer or held by the policy at the date of the notice and setting off the surrender value of the policy at the date of the such notice.
Mention of Period in Notice
The insurer will mention in the notice that it will surrender the policy. It will do so at the end of 30 days after the issuance of notice.
Issuance of another Notice
It is important to mention here that if the policyholder does not pay the excess of the debt over the surrender value to the insurer before the lapse of that period, then the insurer may issue another notice to the policyholder. state effect withdrawal of the policy and may also apply the surrender value against the obligations and liabilities due against the policyholder to the extent of the surrender value.