I have purchased a Bajaj Allianz Future Gain plan (₹3,000 per month). I want to know how is this plan for long term investment and what is its past performance? Should I continue with this plan or look for some other investment like ELSS for better returns?
- Nishant Raj Singh
Bajaj Allianz Future Gain plan is a Unit Linked Endowment Plan. It has both insurance and investment elements in it. We believe that it is better to keep insurance and investments separate. Insurance plans that has investment element are costly. You cannot buy adequate life insurance cover with them. They are also not ideal investment products. They invest only a part of your premium (the other part goes towards insurance cover and other charges), so they do not compare well with pure investment products.
You can consider surrendering the plan to curb your future losses. You have the option to surrender your policy at anytime. However, there's a lock-in period of five years. If you surrender the policy during the first five years, the fund value minus the surrender charge will be transferred to the discontinued life policy fund (maintained by the company). The money will be paid to you at the end of the lock-in period. On surrender after the lock-in period of first five years, the surrender value will be the fund value on the date of surrender, and it will be paid to you immediately.
Do not buy insurance products for investment. Always opt for a pure term insurance plan to buy a large life insurance cover that is adequate to take care of your liabilities and needs of your financial dependents. And you should invest in equity mutual funds for long-term financial goals of five years and more. Equity has the potential to offer better returns than other assets over a long period.
If you are a new comer to the stock market, choose a top-rated balanced scheme and start investing every month via a Systematic Investment Plan (SIP). If you are familiar with the stock market, you can invest in a diversified equity scheme. You must continue with your SIP investments irrespective of the market conditions. This will help you to average your purchase cost and enhance your returns. If you are looking for investments with 80C tax exemption then you can choose ELSS for your long term goals which gives you good returns.
This article was originally published on April 20, 2016.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
