How To Surrender TATA AIA Life Insurance Policy?

Life’s unexpected twists and turns can sometimes lead to tough financial decisions. If you are thinking of surrendering your Tata AIA life insurance policy, you’re not alone. Many find themselves in similar situations due to shifting priorities, financial difficulties, or simply wanting a different type of life cover.

Nevertheless, it is important to know how to surrender the policy in such cases. While it may seem difficult initially, understanding the process involved tends to make it easier. 

In this blog, we will discuss everything about surrendering a TATA AIA Life Insurance policy so that you do not make a decision that you will regret later. 

Let’s get started! 

Procedure for Partial Withdrawal Under Tata AIA Life Insurance Policy

Partial withdrawal from a life insurance policy allows policyholders to access a portion of the policy's cash value without surrendering the entire policy. With partial withdrawal, it gets easier to get funds for life events such as children's education, marriage, medical emergencies and other needs.

• Eligibility for Withdrawal: The lock-in period of five years is a must to serve before you can think of a partial withdrawal. Moreover, the policyholder making partial withdrawal should be above the age of eighteen years. 
• Frequency of Withdrawals: According to IRDAI guidelines, a policyholder can have a maximum of 3 partial withdrawals within the entire duration of the policy but only after the lock-in period has passed.  
• Withdrawal Limits: The minimum withdrawal depends on the policy terms and conditions. Typically, the maximum withdrawal allowed is 25% of the fund value under the condition that at least one year’s premium amount remains in the fund. 

Let’s say after the lock-in period, your fund value is ₹3 Lakh, and your policy premium is ₹50,000 annually. Then, you can take a withdrawal up to ₹75,000 (25% of the fund value). 

Here’s the procedure to follow for partial withdrawal under the Tata AIA life insurance policy. 

• Reach out to the Tata AIA Life Insurance customer support team and let them know that you want to make partial withdrawals. 
• Download the “Partial Withdrawal Form” from the TATA AIA website’s download centre. 
• Complete the form with accurate details. 
• Submit the completed withdrawal form along with the requested documents by the insurer. 
• The partial withdrawal request will be processed. Once approved, the amount will be credited to your bank account within 7 to 10 working days. 

Eligibility Criteria for Surrendering Your Tata AIA Life Insurance Policy

If you would like to surrender your Tata AIA Life Insurance policy, the following certain terms and conditions must be met. 

• Completion of Free-Look Period: This implies that the free-look period, a span that ranges from 15 to 30 days within which one can go through the policy without any commitments, must be over.
• Active Policy Status: Ensure that the policy is in force, which means that all the premiums that are payable have been paid and are up to date.
• Minimum Policy Duration: In some plans, you might be required to complete a minimum duration (two to five years) for a policy term before you can surrender your policy. 
• Required Documentation: Complete all the necessary paperwork, including the surrender request letter and other identification documents.

How to Surrender Tata AIA Life Insurance Policy?

Follow the below procedure if you want to surrender your Tata AIA Life Insurance policy.  

To get started, visit the Tata AIA Life Insurance website. On the title bar, hover over the “Customer Service” section and click on “Download Centre.”

Then, open the “Policy Servicing Forms” dropdown menu, find the “Surrender Request Form,” and download it by entering your policy number. Alternatively, you can go to a TATA AIA Life Insurance branch to get the form in person. 

Fill out the form and submit it with additional documents, including:

• A self-attested proof of identity document. 
• The original insurance policy document. 
• A cancelled cheque or a copy of a bank's passbook  (with attestation for NEFT transactions).

Submit these documents at the Tata AIA branch nearest to you.

In case you are switching insurers, make sure you don't surrender without having an alternative cover, as this may create a gap in cover. 

For further assistance, you may also contact customer service at Tata AIA via the following channels: 

• WhatsApp: Send your queries to 7045669966.
• Customer Care: For Indian residents, dial 1-860-266-9966 (Mon-Sat, 10 am-7 pm IST). Call charges apply.
• Email: Write to customercare@tataaia.com for assistance.
• NRI Helpdesk: Non-resident policyholders can call 022 6251 9966 for support.

Consequences of Surrendering Your Tata AIA Life Insurance Policy

Deciding to surrender a Tata AIA Life Insurance policy can have significant financial and coverage consequences. 

• Loss of Coverage: If you decide to surrender the Tata AIA life insurance policy, you will lose all the long-term benefits and life cover you’ve been paying for. The amount you get back, called the surrender value, is usually less than the total premiums you’ve paid. Consequently, your family will not get the financial assistance they would have if you kept the policy.
• Loss of Death Benefit: The primary reason why one opts to get a life insurance policy is to ensure their family does not experience any financial distress in case of their death. On the other hand, if you choose to surrender the policy, your family will lose out on the death benefit, which is supposed to assist them in hard times.
• Loss of Rider Benefits: Most life insurance plans have additional benefits, called riders, such as critical illness or accident coverage. Hence, if you surrender the policy, such benefits will be lost, too.

Alternatives to Surrendering Your Policy

Surrendering a life insurance policy is usually not the best option. So, rather than surrendering it, here are some alternatives that you can opt for –

1. Paid-Up Policy/Reduced Paid-Up Option

When you discontinue premium payment, your policy will be converted into a paid-up policy. This option allows you to maintain some life insurance coverage even after premium payments have ceased.

For instance, if the initial cover was ₹10 lakhs, it may decline to ₹5 lakhs; however, the life cover will remain until the expiry of the policy, and the beneficiaries will be provided with reduced death benefits. 

2. Borrow Against Your Policy

If you have an endowment policy, you can borrow against it if at least three years of premiums are paid. For instance, if the cash value of your policy is ₹2 lakhs, you can borrow up to ₹1.8 lakhs (90% of the surrender value) in case of emergencies. 

Conclusion 

Surrendering the TATA AIA Life Insurance policy would mean losing all future premiums and cash values associated with it. This can have huge financial implications for a policyholder's financial planning. Needless to say, understanding the process and exploring alternatives can help you make a choice that aligns with your current needs. 

Moreover, it is most appropriate to seek advice from an expert for more exploration and advice based on your case. They will aid you in addressing the challenges and ensure that you make the most appropriate choice towards your policy.

Frequently Asked Questions

Ques 1. What happens if I choose to surrender my Tata AIA life insurance policy?

Ans. Generally, surrender of the policy will often result in a loss of investment as the policyholder may not receive the total amount of premiums paid. Also, you will lose the death coverage that was meant to give your family some financial security.

Ques 2. Can I change my policy instead of letting it go?

Ans. Yes, you can let go of your existing policy and change to a different plan with an insurer. It is risky to do so since one may lose coverage, and thus, it is advisable to obtain the new policy before cancelling the existing one.

Ques 3. What documentation do I need to surrender my policy?

Ans. When submitting your policy surrender request, you will typically be required to submit the surrender request, a valid identification card with a photograph, and any other documents needed by Tata AIA, including the first policy distribution and your updated information.

Ques 4. Will it cost me to surrender my policy?

Ans. Yes, there are costs that come along with surrendering your policy, usually described as surrender fees subtracted from the policy surrender value. Such costs can place limits on how much money you will receive when terminating the policy.

Ques 5. What happens to my rider benefits if I surrender my policy?

Ans. If you decide to surrender a policy, any rider benefits on that policy will also be terminated. In other words, you will forfeit various extra coverage options like critical illness benefits and accidental death benefits.