Tuesday, June 14, 2016

Surrender ULPPs

 

ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.

 

Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies will cover you and the premiums of the term plan will be on the higher side. You can check the following term plans and choose the one that suits your requirement (1 crore cover for a term of 11 years).

 

Max Life Online Term Plan: Annual premium R53,900 (claim settlement ratio: 98.63 per cent)
Canara HSBC OBC Life Insurance eSmart Term: Annual premiumR40,300 (claim settlement ratio: 95.06 per cent)
HDFC Click2Protect plus: Annual premium R66,372 (claim settlement ratio: 95.86 per cent)

 

In future, do not buy insurance products for investment. You should opt for pure investment products like mutual fund schemes to achieve your retirement goals. You can opt for government backed schemes like Senior Citizen Savings Scheme (SCSS), Post office Monthly Income Scheme (POMIS) which has capital protection and fixed rate of interest. Monthly Income Plan of mutual fund is another option you can choose for income during your retirement, if you are willing to take a little risk.

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