My name is RAMESHA VARNA B., aged 39 years from Bangalore I have taken four ULIP policies in 2007-2009. The details are as follows 1. HDFC standard life Unit Linked pension plan II with Yearly premium of Rs 15,000/- in March 2009. 2. Birla Sun life Flexi life line 2006 with Accidental death & dismemberment rider with yearly premium of Rs. 10,288/- in July 2007 3. AVIVA Young scholar with annual premium of Rs.20,000/- in Sep 2009 4 LIC money plus with yearly premium of Rs 10,000/- paid only for 3 years. After taking these policies & invested for more than three years(lock in period), I realized that the fund growth is not much & maximum charges were taken in the initial years. Now I couldn't continue paying ULIP policies. Suggest me how to continue with the coverage & getting maximum benefit from the above ULIP policies?
1 Answers
Unfortunately like most of the Indians (may be due to insurance agent push), you have bought insurance policies for investment needs.
Insurance and investment are two altogether different aspects and one must keep them separate. Insurance is for protection of your family/dependents against any unforeseen event. Whereas investment is for multiplying money for future usage.
Most of the ULIPs had high percentage of load deducted in initial years, which helps company to recover its cost for marketing and huge agent commissions.
As only 70-80% of your amount was invested in initial years and market conditions was not that great in last 3-4 years, your funds may not be performing well.
If lock-in period of these policies is over, it would be better if you can get rid of these and invest whole surrender value into equity mutual funds for long term. There is no point getting mortality charges deducted from fund value every month and still get a small sum insured.
For insurance need, only buy a pure term insurance policy.
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