I bought Maxlife Magic Builder plan 6 years ago. Should I continue this policy for another 9 years or discontinue it now?
- Mahadevan A S
Max Life Amsure Magic Builder plan is a Unit Linked insurance plan. These plans are neither good investments nor do they give sufficient insurance cover. 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 such plans generally give lower returns even if the market is doing well. These type of policies are sold hard due to the attractive commission for the agent. We recommend that you surrender this plan now to minimize your future losses.
The surrender value of this plan will be the fund value as on the date of surrender. Since you have completed 6 years there will be no surrender charges applicable on your ULIP. It has a lock in period of 3 years after which you can surrender the plan. After 5 years you can surrender the plan without any surrender charges and the fund value at the time of surrender will be paid out to you.
Do not mix your insurance and investment needs in future. Always buy a pure term life insurance to buy an adequate cover to protect the your goals for children's future against any contingency. Term insurance products are ideal for insurance cover because they have very low premiums. Your investment need for your children will most likely be a long term investment. Equity is the best form of long-term investment, and mutual funds the easiest way to invest in equity. Invest in Monthly SIPs and across 3-4 fund houses.
This article was originally published on June 29, 2016.
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