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Should I move out of HDFC ULIP plan and invest in equity?

Dhirendra Kumar advises sticking to term plans for insurance and equity SIPs for long-term investments

I have invested in HDFC ULIP plan. However, over the last four years, the value has fallen considerably. Should I continue with it or move to equity funds?
- Amit

Usually, one shouldn't invest in ULIP plans. Since it has already been four years, take out your policy document and look at the terms and conditions regarding surrender charges. Usually, surrender charges are less if you hold the policy for five years or so, as the longer you hold the policy, the lesser the surrender charges will be. So, look at this carefully and analyse how much you will be charged if you surrender the policy now as against a year or six to eight months from now and decide accordingly.

Further, for the insurance purpose, buy a term plan and for your long-term investments, start an SIP in an equity fund with a consistent long-term track record.