I have taken the LIC Market Plus One policy. I have paid premium of Rs 1 lakh each in 2009, 2010 and 2011. I have opted for the pension option at the age of 40. I am right now 30 years old. Should I stay in this policy or invest in a mutual fund?
Ajay
If you have invested in the past 3 years, there would have been hardly any profits that you would have made. The policy that you have invested in is a ULIP. Such plans that are offered by insurance companies give you a number of things like pension, insurance and investment. But the mixture of all these elements makes it hard for anyone to objectively evaluate such a scheme. This is why we have always maintained that insurance and investment shouldn’t be mixed. Choose good mutual funds as your investment vehicle. For insurance, which is very important, buy a term plan by closely evaluating how much your dependants would need in the event of your death. Term plans also have the added advantage of a low premium.
This article was originally published on January 27, 2012.
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