What to do with my ULIP plans? | Value Research We do not advocate mixing insurance and investment needs. When you mix them, you end up with costly policies that do not offer adequate life insurance cover
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What to do with my ULIP plans?

We do not advocate mixing insurance and investment needs. When you mix them, you end up with costly policies that do not offer adequate life insurance cover

I am 34, and I work in a nationalized bank. I am married and have a daughter (6 months). I am investing in two Unit Linked Pension Plans every month: ICICI Life stage Assure Pension (₹1,250 per month) and ICICI Life Stage Pension (₹2,500 per month). I have started these investments in July 2009. The current value for these investments are: Life Stage (₹2,65,417) and Life Stage Assure (₹1,08,038). I want to know whether I should continue with my investments in these pension plans. Also, what is the expected return on my investment for the policy term of 21 years? I have also invested in ICICI Pru Life Time Premier with ₹50,000 per year for five years. I have completed my lock-in period of 5 years in this policy. Company has given me an option to continue with my investment in the same policy for the next five years. Should I wait till due date (October 2019) or should I withdraw this amount and invest it some where else?
- Shailesh Saurabh

You have bought three unit linked plans which have high charges during the initial few years. ICICI Life Stage Assure Pension Plan doesn't invest the first year premium. It is deducted for providing guaranteed addition of 120% of the first year's premium at beginning of 10th policy year if your policy term is 10 - 14 years. Even a bank FD can double your money in eight to nine years. ICICI Life Stage Pension does not have any premium allocation charges, but its policy administration charge is high at 6% per year. ICICI Pru LifeTime Premier has 9% premium allocation charge for the first year. Apart from the charges already mentioned, these policies also charge fund management fee, mortality fee as well.

We do not advocate mixing insurance and investment needs. When you mix them, you end up with costly policies that do not do justice to both. These polices offer inadequate life insurance cover and they are also a bad investment choice because of the higher charges.

We believe that it is always better to stop bad investments. You should consider surrendering these plans. Before you surrender them, you must buy an adequate life insurance cover for yourself. You should always buy a term insurance plan for a life insurance cover. Buy a term plan from HDFC Life, Aviva Life or MAX Life. These companies are recommended because they have a better claim settlement ratio.

Invest in an equity mutual fund scheme to accumulate a retirement corpus for you. Here is a list of the best diversified equity schemes.


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