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I have invested in a ULIP that has tenure of 10 years and premium of Rs 50,000 per year. This is my 2nd year to deposit the premium. The maturity of this plan is based on the guaranteed highest NAV option. I would like to know what are the chances of getting my money back after 1o years.
-Anuj
It is very likely that you will get your capital back after 10 years; you might even get more than that. But more importantly, a ULIP bought 2 years back that guarantees the highest NAV achieved in the life of the fund, has some catches in it. The rules for ULIPs have undergone a radical change. They have become better than what they were previously. But you are not holding the better ULIP because the changes came into effect only in 2011. The older ULIPs were more expensive and most of the expenses were front loaded, they were deducted in the first year itself. The rule to follow about ULIPs, after you have invested in them, is that you should stay invested for the first 3 years. You shouldn't consider exiting for another 2 years because the surrender charges are high.
Coming to your ULIP, you have been guaranteed the highest NAV, which looks very attractive. But if a product of this kind ever faces a market decline, then it is structured in a manner that it loses the future potential. The fund becomes more conservative to honour the promise of achieving the highest NAV. So, you should continue investing for 5 years and then think about opting out.
This article was originally published on February 03, 2012.
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