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POSTED BY ON May 15, 2012 11:10 am COMMENTS (3)
Bottom line is after hours of calling the Bank from USA I have come to a conclusion to stop the policy and pay Rs 1.50 lakhs as surrender fee, wait for 5 years and pull 20 lakh minus the fee from the Bank. Please suggest me if you have other views
Regards Major Raj Singh
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Dont surrender it at the moment , let it be there for 5 yrs and choose “equity option”. I am sure the damage would be much much lesser than this .
I wonder why people dont hire an advisor for 15k or 20k .
Manish
Dear Manish, the policy in question is a regular prem. policy so if dear Raj, is not opting to surrender, there ‘ll be future liability of 4 more prem. Dear Raj, please check on the guidelines of what justgrowmymoney has told.
By the way, please do try to lodge a formal complaint with the Insurance ombudsman as well as banking ombudsman as the agent in question here is HDFC bank.
Thanks
Ashal
Major – Consider some bright lining here The maximum surrender charge in a ULIP cannot exceed Rs. 6000 in any case. The Bank staff just applied a % of the premium paid and have said it is 1.5 lacs. This itself explains the level of knowledge they know about the product.
IRDA has gotten stricter at least over the last 2 years so the maximum surrender charges are capped. The following will be the working if you surrender now:
Premium Paid by investor
minus
ALL CHARGES FOR YEAR 1 (Premium Allocation Charge, Policy Admin Charge etc. etc.)
plus
Change in investment value since units were allocated in Jan 2012 (This number could be positive or negative)
minus
Surrender charge subject to a maximum of Rs. 6,000 only.
This amount will be moved to a separate account and for the next 56 months this will earn SB account interest as proposed by SBI minus an admin charge of 0.5%=> 4%-0.5% = 3.5% p.a. So for the next 4.66 years this balance will earn 3.5% each year compounded.
By way of expenses and charges you are still okay (Overall 7-8% of first year premium is lost) but the money being blocked for 5 years earning 3.5% versus the 9.5% NRE FD results in an opportunity cost.