1. Common reasons why we end up with Ulips are:-
a) Tax-saving
b) Life Insurance
c) Returns
due to hard-selling by agents for higher commissions.
2. Having bought them, we should now evaluate their served purposes, as they are not a first-choice product, either for investment or for life insurance.
3. Regarding their tax benefits,
a) If you have paid premiums for 5 years, you have already availed their tax benefits u/s 80C each year, which won't be reversed by tax authorities.
b) You will also be able to avail tax benefits on their returns u/s 10(10D) whenever you choose to redeem them, provided their mortality covers are minimum 10 times their annual premium.
4. Regarding their life insurance benefits,
a) Life cover is simply not enough in the event of an untimely death.
b) Premiums are far too costly for the life cover.
5. Regarding their return benefits,
a) It is hampered due to numerous charges and high agency commission (IRDA has capped them of late).
b) It underperforms equity funds by 5-7% annually in the long-term.
6. In case you want to exit from your Ulips now,
a) Firstly, buy an online term insurance policy to cover 10-15 times of your current annual earnings.
b) Secondly, open an ELSS fund account which has a higher return potential, with lesser charges and lock-in, besides Sec 80C tax benefits.
c) Thirdly, invest the Ulips' proceeds systematically into the ELSS fund account over 1-2 years.
d) Lastly, continue with both products till your retirement, by paying annual premiums of the term plan and investing systematically monthly in the ELSS fund.
7. If you can't do the above now,
a) It is better to hold on to your Ulips till maturity to reap their maximum benefits, as fund management charges are highest in the first few years which have already been charged, besides some life insurance.
b) You should stop paying further premiums, to invest them elsewhere.
c) You will be able to avail some life insurance benefit too till maturity.
d) Their maturity proceeds will remain tax-free in your hands.
a) Tax-saving
b) Life Insurance
c) Returns
due to hard-selling by agents for higher commissions.
2. Having bought them, we should now evaluate their served purposes, as they are not a first-choice product, either for investment or for life insurance.
3. Regarding their tax benefits,
a) If you have paid premiums for 5 years, you have already availed their tax benefits u/s 80C each year, which won't be reversed by tax authorities.
b) You will also be able to avail tax benefits on their returns u/s 10(10D) whenever you choose to redeem them, provided their mortality covers are minimum 10 times their annual premium.
4. Regarding their life insurance benefits,
a) Life cover is simply not enough in the event of an untimely death.
b) Premiums are far too costly for the life cover.
5. Regarding their return benefits,
a) It is hampered due to numerous charges and high agency commission (IRDA has capped them of late).
b) It underperforms equity funds by 5-7% annually in the long-term.
6. In case you want to exit from your Ulips now,
a) Firstly, buy an online term insurance policy to cover 10-15 times of your current annual earnings.
b) Secondly, open an ELSS fund account which has a higher return potential, with lesser charges and lock-in, besides Sec 80C tax benefits.
c) Thirdly, invest the Ulips' proceeds systematically into the ELSS fund account over 1-2 years.
d) Lastly, continue with both products till your retirement, by paying annual premiums of the term plan and investing systematically monthly in the ELSS fund.
7. If you can't do the above now,
a) It is better to hold on to your Ulips till maturity to reap their maximum benefits, as fund management charges are highest in the first few years which have already been charged, besides some life insurance.
b) You should stop paying further premiums, to invest them elsewhere.
c) You will be able to avail some life insurance benefit too till maturity.
d) Their maturity proceeds will remain tax-free in your hands.