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Should I exit my insurance policy?

TATA AIA Life Insurance Invert Assure Gold Plus Fund is an insurance policy with inbuilt investment element in it

I have invested ₹50,000 per annum in Tata AIA Life Insurance Invest Assure Gold Plus Fund (Whole Life Mid Cap Equity Fund). The sum assured is ₹30 lakh. I started investing in this policy since May 2010. I have paid premiums for five years till May 2014. I see the growth of the investments stands at ₹4 lakh as in March 2016. This indicates very low returns. I have invested in this policy for creating a retirement corpus. I have also found that a huge money was charged as premium allocation charges, mortality charges and monthly administration charges. I also found out that 15 units are sold as monthly charges (₹450/Month) and my current holding are 1,2571 units. I had 12,829 units when I paid the 5th installment in July 2014. I see that around 180 units are sold every year. Is it a good policy to hold on to or should I exit this policy?
- Lakshmanan PV

You have picked up a Unit Linked Insurance Plan (ULIP) to create your retirement corpus. TATA AIA Life Insurance Invert Assure Gold Plus Fund is an insurance policy with inbuilt investment element in it. An insurance policy is never a great investment option. Insurance plans with investment element in them typically deducts charges towards life insurance cover (mortality charges), administration expenses and fund management charges etc from the premium. Only the balance amount is actually invested. This is the reason why it cannot be treated like an investment product. Also, it seems you have opted for a limited premium paying term for this policy. There will be fixed charges applicable on the policy for full tenure and this will be utilized from your existing fund/units. This could be reason for the reduction in the number of units.

If you are not happy with the performance of the policy, you can consider surrendering it to stop the future losses. Surrender value will be equal to the fund value as on the date of surrender since your have completed the 5-year lock in period..

In future, do not buy an insurance policy for investment purpose. Always Invest in equity mutual funds to achieve your long-term financial goals and buy a pure term Insurance to secure an adequate life insurance cover.

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