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Should I surrender ICICI Pru Elite Wealth II?

Yes, but you will get the proceeds only after five years

I have bought ICICI Pru Elite Wealth II. Should I surrender this policy now? The initial free look period is over and I have paid first installment. I need to understand how to calculate the loss if I surrender now and invest in an MF SIP instead. Please guide me.
- Abhijit

ICICI Pru Elite Life II is a unit linked policy which is a blend of insurance and investment. We do not recommend any investment with an insurance element built into it. Such products neither offer transparency on investments nor sufficient insurance cover. It is always better to keep the two separate. Since you haven't completed 5 years, if you surrender the plan now, the fund value will move to a discontinued fund account. This will be paid out to you after a 5 year lock-in and after deducting discontinued charges applicable on this plan. Therefore you will not able to get back your money immediately to invest it in mutual fund plans. However, though you will make losses on surrender, it is not wise to continue investing in a bad product.

Either forgo the premium that you paid or you can surrender the policy and take the fund value after the lock in period. Invest the sum set asis for future premiums in a investment which gives better returns.

You should buy term plans for your insurance need. Term plans are typically low cost insurance plans that provide full protection and financial stability to your loved ones in case of any unforeseen events. And for investments you can choose a top rated balanced funds or diversified equity mutual funds for long-term goals of 5 years & above. Equity has the potential to offer better returns than other assets over a long period.

Start investing in a balanced fund every month via a Systematic Investment Plan (SIP). If you are familiar with the stock market, you can invest in a diversified equity scheme. You must continue with your SIP investments irrespective of the market conditions. This will help you to average your purchase cost and enhance your returns.

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