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Is ULPP a good investment option?

Here's why we would advise against unit linked pension plans (ULPP)

I intend to go for HDFC Unit Linked Pension Plan for 20 years term. Is HDFC Life Assured Plan a good pension plan?
- P V Srinath

We would not advise it. Unit Linked Pension Plans (ULPP) are pension schemes with inbuilt insurance. In these products, in the accumulation phase you pay premiums regularly till your intended retirement and then purchase an immediate annuity (regular income) from the same insurer. The problem with ULPPs is that they earn you a low return during the accumulation phase. They are expensive plans too. Apart from fund management charges ULPP also charges premium allocation charges, policy administration charges, mortality charges, and for guaranteed ULIPs, guarantee charges as well.

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 can buy a very large cover with a low premium in a pure term insurance plan.

If you do not have a regular pension from your employer, it makes sense to divide your investment amount between assured return schemes such as PPF/VPF for capital security and invest in equity mutual funds for higher returns. Depending on your risk appetite and equity exposure required, you may invest in good equity diversified mutual funds.

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