Surrendering ULIP

POSTED BY Biswajit Das ON March 1, 2013 5:03 pm COMMENTS (3)

Dear All 

I have following ULIPs which are done purely for investment purpose.

1. HDFC SL Crest – Rs 50000/- per annum – premium paid for 2 yrs

2. ICICI Pru Life Stage Wealth II – Rs 50000/- per annum – premium paid for 2 years

Current market value of both of them is around 90-95% of what I’ve paid.

3rd premiums of both are due in Feb’13 which I’ve not paid coz I dont want to invest anymore. (My insurance part is taken care of by term insurance). But while contacting customer service, both of them said the same thing regarding surrender.

1. If I dont continue for 5 yrs, current fund value will go to discontinuation fund after deducting discontinuation charge.

2. I can revive the policy anytime within 5 yrs by paying balance premium

3. For the next 2 years, my fund will remain with them and I’ll get simple interest compared to that of a SB account. But I’ll get my money back only after completing 5 yrs, i.e. 2 yrs from now.

Now my querries are

1. Is there any other way to get the money now, so that I can invest elsewhere

2. If not, then for the next 2 yrs, I’ll get only 3-4% interest on my investment of around 2 Lakh. Now I’ve 2 choices

a. I can continue with the ULIPs by paying premiums which can give me atleast higher return than SB account, and also give the benifit of compounding.

b. Let the amount be with them with 3-4% interest and invest my surplus money in MF thru SIP (which i’m already doing)

Kindly suggest me the better option. Thanks.

3 replies on this article “Surrendering ULIP”

  1. Biswajit Das says:

    Thanks Pattu and Ashal, as always !!

  2. Dear Biswajit, stopping prem. at this stage & investing elsewhere ‘ll provide you better return on the future prem. The surrender amount can be invested after getting it back to earn more return. Over all you ‘ll get better return than these policies.

    Thanks

    Ashal

  3. No to “Is there any other way to get the money now”
    If you choose 2(a) you need to understand how a ULIP works and know how to use it
    If you choose 2(b) you must understand why you want to exit clearly and then invest the surplus wisely.

    Either way you need to clear about your goals and know how much you need to invest each month or year and then proceed. Either way you need to learn.

    If you choose 2(b) it is not such a bad deal for 2 lakh to earn SB acc like interest. Will not loose too much on the power of compounding.

    Knowledge is the real power. So focus on learning

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