Get out of this plan as you are in profits now. Do not mix insurance and investment needs in future
I have invested ₹2 lakh in HDFC ULIP Wealth Maximser Plus in September 2009. It was a single premium policy with 2.5% allocation charges in the first year. The sum assured is ₹2.2 lakh - this reduced the mortality charges to the minimum, but exemption under section 10(10) D under income tax is not available on maturity proceeds. Fund is split between two funds - Managers Fund and Midcap Fund. The current fund value ₹3,78,280. I do not require money for at least for the next five years. Should I continue to remain invested in this fund? Also, is there any way to save tax on maturity/redemption, considering Sec10 (10) D exemption is not available?
- Anil Singhvi
Premium allocation charges in the first year were 13% if you had taken this plan under normal underwriting process. However, if you had bought it with a small medical questionnaire, the charges would have reduced to 8%. Apart from this, there is also fund management charge of 1.75% per annum, policy administration charge of ₹20 per month, mortality charges and miscellaneous charges.
You may get out of the plan as you are in profit now. For applicable taxation rules on surrender of your insurance policy, refer to: Taxation on insurance products.
Do not mix your insurance and investment needs. Always buy a term plan for your life insurance cover and invest in equity mutual fund schemes to achieve your long-term financial goals.