Shun ULIPs | Value Research ULIPs are a mix of investments & insurance and fail to do complete justice to either…
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Shun ULIPs

ULIPs are a mix of investments & insurance and fail to do complete justice to either…

My annual income is Rs 6 lakh and I have one LIC policy in which I pay Rs 26,000 annually, ICICI Prudential Life Time Gold Rs 30,000 annually, HDFC Top 200 and DSPBR Small and Midcap in which I have Rs 60,000 investment per annum. How is the choice of funds?
- N H Srinivas



Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
HDFC Top 200 Large & Mid Cap ***** 16.06 17.07
DSPBR Small and Mid Cap Mid & Small Cap ***** 15.32 NA
Returns as on April 21, 2011 Ratings as on March 31, 2011

Your investments in the LIC policy and ICICI Prudential Life Time Gold are unit-linked in nature. Such type of investments are a mix of investments and insurance and do complete justice to neither. You should check value of your investments in these and consider exiting them whenever the penalties are low. If insurance is your objective; look for term plan from life insurers, as these are low-cost high-value pure insurance products that cover risk and no more.

If you are looking for investments, mutual funds are the right products for you. Your choice of HDFC Top 200 and DSPBR Small and Mid Cap funds are very good. Together they offer you diversification across large-, mid- and small-cap companies. Besides, both have a good track record and performance history to back selection into any mutual fund portfolio. There is a lesson that you can draw from this experience; never club investments with insurance as they work best when addressed independently. Track the performance of your investments and make any change in fund selection if the selected funds do not fare well.




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