I am Sreenish, 32 from Thiruvananthapuram. I have a ULIP, started at 1000 per month from July 09, i.e. around INR 72000/- invested till date, SI is 60,000 only. Fund value as on today is around 81500 with surrender charges 18-19% of first year’s annualized premium.
My premium period is 15 years (i.e. around 8 more years to go). The advise that I’m requesting is that should I continue with this ULIP or move to some mutual funds for returns. (I am not worried about the LI part as I’m already well covered by my employer). Which one is better, ULIP or Mutual Funds?
Expert Advice –
Firstly, I have some serious thoughts on your request.
1. SI of Rs. 60000.00 is plainly ridiculously low.
2. Your thought on "well covered by my employer" is flawed, as you and your family cannot be dependent on your employer, in case of an eventuality. Further, if you quit or lose your current job, the cost of a fresh policy at a later age, will be much higher than making a good and fruitful, planned beginning today.
3. Never mix up Insurance and Investment. They need to be always addressed independently.
4. Insurance is for an EVENTUALITY ONLY where as Investment is towards a GOAL and needless to say, liquidity is fundamental to Investment. Either to restructure on review, or simply easy exit if you find yourself uncomfortable. If your adviser is good, the second need does not arise, as he will diligently manage the same.
5. Term Insurance is the way out to get adequate cover, the balance money, which you will otherwise pay towards a ULIP or Endowment Policy can be invested in Mutual Fund for better returns.
However, like ULIP, your Mutual Fund (MF) return on investment will be dependent on the market conditions. I hope you have got my message right, and find this advice valuable. Wishing you all the best for your future. Please engage a Worthy Adviser to avoid flawed investments.
All the Best
- Dutt Sharma