What happens to the encashment charge on a unit-linked savings plan after the sixth year?

In a unit-linked savings plan, the encashment charge is typically designed to incentivize policyholders to maintain their investment over a longer period. After the sixth year, it is common practice for many insurers to eliminate the encashment charge altogether. This means that policyholders can withdraw their funds or make adjustments to their plans without incurring additional costs at this point.

The rationale behind this policy is to encourage long-term savings and investment, as the insurer recoups their expenses over the initial years when charges are generally higher. By removing the encashment charge after six years, policyholders are given a greater opportunity to access their funds without penalty, which can be particularly advantageous for those who have built up a significant investment by this time.

This approach aligns with the goal of fostering customer loyalty and satisfaction, as it allows individuals to feel more secure in their investment, knowing that they have the flexibility to access their savings as needed after the stipulated period.