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Should I surrender my ULIP 'Max Life Shiksha Plus II'?

Yes. It is not a good idea to combine investments and insurance

I have been invested for 5 years in the Max Life Shiksha Plus II plan. Should I continue investing, stop new investments or completely pull out? The value of the fund is barely close to what I invested.
-Ram Natarajan

Max Life Shiksha Plus II Plan is a Unit Linked Insurance Plan (ULIP). In these type of plans, the premium that you pay gets invested after deduction of various charges - premium allocation charges, fund management charges, mortality charges, etc. So only the balance amount gets invested. Due to these costs, the investment generally gives lower returns even if the market is doing well.

These type of policies are sold hard due to attractive commissions for the agent. To avoid being shortchanged you must always read the policy brochure/document carefully during the free look period. We recommend that you surrender this plan now to minimize your future losses. Since you have completed the lock in period of 5 years on your ULIP, the surrender value should be the same as the prevailing fund value. The surrender values of ULIPs are not tax exempt under 10 (10D).
Do not mix your insurance and investment needs in future. 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 and mutual funds are best suited to meet your investments needs. Invest in diversified equity mutual funds to achieve long-term financial goals of five years and above. If you are a newcomer to the stock market, choose a top-rated balanced scheme and start investing every month via a Systematic Investment Plan (SIP).

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