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I have HDFC Life ProGrowth Plus policy since Feb 2014 but it is not offering good returns. Should I close it?
- Prabhat Jain
HDFC Life ProGrowth Plus is a unit linked insurance plan (ULIP) which is a combination of insurance and investment offered by life insurance companies. In these type of plans, from the premium you pay, the insurer deducts charges towards life insurance (mortality charges), administration expenses and fund management charges. So only the balance amount is invested. Due to these costs, the residual investment of your ULIP is not sufficient to give considerable return even if the market is doing well. We recommend that you surrender this plan now to minimize your future losses.
There is a 5-year lock in period in this policy. If you surrender now, the fund value will be transferred to Discontinued Policy Fund after deducting the discontinuance charges into. You will get this money after completion of five policy years.
In future, avoid insurance policies with investment element in them for investment. It is always better to buy a pure term plan to get an adequate insurance cover to take care of your financial dependents. You can buy a very large cover with a low premium in a pure term insurance plan. You should opt for pure investment product like an equity mutual fund schemes to achieve your long-term financial needs.
This article was originally published on May 09, 2016.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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