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TDS on ULIP Surrender Value

A ULIP that has completed 5 years will not attract surrender charges, but TDS will be levied on the surrender amount

I had invested in ICICI Prudential SmartKid ULIP (Maximiser) in the year 2007 for a premium of ₹10000 a year. As of now , the total premium deposited is ₹80,000 and NAV of the policy stands at near ₹1,42,000. I wish to surrender this policy and invest in equity mutual funds and select equities.
Please advise me whether I should surrender this policy now keeping in view the higher charges that have already been paid and relative performance.
Will surrendering the policy attract TDS as it has already completed five years and eight premiums have been deposited regularly? The branch manager of ICICI Prudential says that TDS will be deducted on surrender value minus the premium deposited.

- R S Rawat

We believe that it does not make sense to combine insurance and investments into a single product. We suggest surrendering the ULIP and investing the proceeds in diversified equity or balanced mutual funds. Since you have completed five policy years, there will be no surrender charges on doing so. Yes, you will have to pay the TDS at the time of surrender on the entire sum received, at 2 per cent (if PAN is registered) or 20 per cent (if PAN is not registered).

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