Investment in an endowment plan | Value Research Insurance-cum-investment products don't offer adequate insurance cover and they also don't offer good returns
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Investment in an endowment plan

Insurance-cum-investment products don't offer adequate insurance cover and they also don't offer good returns

I have bought Max Life Life Gain Plus for an annual premium 50,000.I have already paid four premiums, out of the total six, since March 2012, and the rest two instalments are due in March 2016 and 2017. When enquired, I was told that the current value of my investment is around ₹75,000. What should I do? I have taken this policy for my son who was three years then and the term of the plan is 25 years (till 2037). I am retiring next year in July with ₹17 lakh and with ₹15,999 as pension from the Air Force.
- Pawan Kumar

You have chosen an insurance-cum-investment product to save for your child. Such products fail on two counts: they don't offer adequate insurance cover and they also don't offer good returns.

Max Life Life Gain Plus is an endowment plan with a limited premium payment term. Such plans do not disclose any charges. Also, investors do not get to know how their premiums are invested. They also offer modest returns.

If you surrender the policy now, your will incur huge losses. The plan offers a guaranteed surrender value of only 30% of the total premiums paid minus the first year's premium. But surrendering it will help you stop a bad investment and earn better returns elsewhere.

However, before you surrender the plan, you must ensure that you have an adequate life insurance cover. If you don't have an adequate insurance cover, buy a term life insurance cover.

Do not buy an insurance cum investment product to invest for your future financial goals like son's education. Always invest in an equity mutual fund scheme to achieve your long term financial goals. If you want to invest in an equity fund for your son's education, here is a list of diversified equity mutual fund schemes.


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