I purchased the insurance policy of ICICI LIFE STAGE PENSION for 10 years. I have already paid eight premiums. Tell me whether should I continue with this policy or should I go for a premature exit?
- S C Agrawal
ICICI life stage pension is a Unit Linked Pension Plan. Since your policy is about to mature in 2 years, you must evaluate all the available options before you take a decision.
At maturity, you can withdraw 1/3rd of the maturity amount as a tax free lump sum and the balance 2/3rd has to be taken out as regular annuity (taxed as income). Annuity option, while guaranteeing income at a fixed level, offers low returns, is not tax-efficient and locks up your money.
If you would like to maximise returns, you should consider surrendering the plan. Since you have completed the lock in period of 5 years, there will be no surrender charges. The surrender value will be the fund value and will be taxed as per the income tax slab applicable to you.
In future, do not buy insurance products 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 should opt for pure investment product like mutual fund schemes to achieve your retirement goals. If you are looking for income during your sunset years, you can opt for government backed schemes like Senior Citizen Savings Scheme (SCSS) or Post office Monthly Income Scheme (POMIS) which has capital protection and fixed rate of interest. Monthly Income Plan of mutual fund is another slightly riskier option for income during retirement.
This article was originally published on May 23, 2016.
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