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POSTED BY ON September 18, 2011 12:39 pm COMMENTS (7)
Hello All,
I was one of those idiots, who bough ULIP ( ICICI Pru life stage RP) without understanding anything.
I had bought it in August 2007 & paying premium monthly as INR 2000. Although I am in loss today as I had to bear heavy allocation charges -25% in first yr,12.3% in second & third year & now 2% from 4th yr onwards, I was told by customer care of ICICI that if you continue it for at least 5 yrs you will get bonus of 12.5%.
I am hoping that at least I should get whataver I have invested till now, but still conussed.
What would you advise as to whether I should continue until 5 yrs or switch this policy to some other policy or completely terminate or something else?
Suggestions would be greatly appreciated.
Thanks again in advance.
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Hi Ramesh,
Appreciate your response.
I had spoken to ICICI & they told me that I can withdraw the amount anytime after 3 yrs or can stop paying further premiums & keep money invested as long as I want. But Manish mentioned that if I withdraw now, ( before 5 yrs- it’s been 4.1 yrs as on today), it woudl be taxable.
What would you advise me in this situation? Shall I then continue till 5 yrs & wait once the returns become equal to invested or just withdraw after 5 yrs or stop paying further premiums & wait till 10 yrs( as I do not need the money immediately).
I am also ready to switch the funds to some other policy ( ICICI prudential flexi growth), but now sure which one..
You can imagine how confussed I am.. I woudl really appreciate if you could help me in clearung it.
Thanks 🙂
Equity investments do not work that way.
You need to look at these products in the longer term perspective. Get a holistic view of your portfolio.
What makes you think that gold SIP will give you 8%.
Look at the policy wordings of your particular policy. Since it is an older policy, I think you can get refund after 3 years. Check with the ICICI customer care, if you are not sure.
In any case, I would suggest you should keep this policy and make the best out of it. First get all the facts and scenarios about the policy, only then take a decision.
Equity Investments, whether MF or direct or Ulips require long term thinking. Projecting recent past performance into future doesnt work with them.
You may have the facility of Switching equity into debt or vice versa, etc too.
Oops.. is it?? Thanks Manish. Then I guess I have to continue till 5 yrs 🙁 ( such a waste of next 22k). After that do you suggest that I withdraw money & invest somewhere else or shall I just keep money in th ULIP stopping next premiums until the value becomes equal to my invested amount?
Geet
Also in case B, you can invest the lumpsum you receive in a FD . that would give some returns .. also note that ULIP withdrawal amount before 5 yrs is TAXABLE , a lot of people do not know that !
Manish
I apologize – Case B is not to continue with policy for 5 yrs & stop now itself.
Here it is,
Case A Continue with the policy for 5 yrs
Invested Amount INR 1,20,000
Expected return ( based on current returns) INR 1,00,000 (Approx)
Profit in % -0.2
Total Returns ( as on today) – 90000 + 21560( 2%allocation charges on 22k) = 111560
Case B Continue with the policy for 5 yrs
Invested Amount ( as on Sept 2011) INR 98,000
Return ( As on today) INR 90,685 (Approx)
Profit in % -8.8
Alternative- invest 22k(2k per month till aug2011) in SIP of gold savings to make profit by 8% so-23760
Total returns- 98000(current invested) + 22000(SIP) = 90000+23760=113760
Geet
you have to do a very simple and logical comparision of Case A and case B , where A is when you continue it and case B is when you discontinue it and reinvest the redemptions and redirect your further premiums to something better . this calculation seems tough , but its very easy and logical . Do it once and share the learnings .. we will help you after you have done this .
Manish