Should I surrender SBI Life's Smart Wealth Assure?

My mother bought SBI Life's Smart Wealth Assure in March 2011 with a single premium of ₹50,000 for a sum assured of ₹55,000 with a maturity period of 10 years. The current value of the investment is about 63200 which comes to about 5.4% annual growth. I am of the mind to surrender the policy in March and invest the sum in a balanced mutual scheme. Is it wise?
As I understand from reading the Q & A on the website, the surrender value of the ULIP gets added to the taxable income, and one also has to pay back the tax rebate claimed. Won't this be a case of taxing the same money twice? Or the amount getting added to the taxable income is only the gain realised?
- Gaurav Singh

Smart Wealth Assure is a single premium Unit Linked Insurance Plan (ULIP). It is a good idea to surrender this plan, as even a bank FD would have earned you better returns. You can invest the money in an equity-oriented balanced fund. These schemes invest at least 65% into equities and the remaining money in debt. The Debt portion provides a cushion during downfalls and equity investment results in capital appreciation. However, you should invest in a balanced scheme only if you have a minimum investment horizon of five years.

For taxation details on you ULIP plan, read: Taxation on insurance products

This article was originally published on October 13, 2015.