Should I continue paying my ULIP Premiums?
Dear Fpguru
My question is that I have bought ICICI Pru Pinnacle Fund in 2009,already paid two years premium have to pay for one more year.The premium amount is 50,000/-. Can you suggest me what should I do with this fund?
Thank you
Darshini
Dear Darshini,
We thank you for visiting our website.The policy mentioned by you is a Unit Linked Insurance Policy or popularly known as ULIP. ULIP’s per se are not bad products but most ULIP’s available in the market don’t score highly with regards to coverage or returns. After studying the policy mentioned and since you are supposed to pay only one last premium we suggest you to do that and continue the policy. If you don’t’ pay third premium, you will lose out on the other two premiums as well. For an insurance plan to acquire some surrender value, atleast three premiums should be paid. If you surrender the policy after the third premium you will have to pay a surrender charge.
Ideally we don’t suggest any one to buy ULIPs for insurance needs but as you already have bought one, the solution lies in continuing it. The only scenario in which it is suggested to discontinue is when the premiums are so high that it becomes difficult to continue it.
ULIP’s in concept are a good product offering both insurance & investment with some tax advantage however in reality most of the products have been mis-sold & wrongly promoted. These are long term products & should be bought with that in mind. At maturity, the higher of the Fund Value and Guaranteed Value, along with the Additional Allocation shall be payable. Also, inspite of all the charges which are to be paid, the returns of the policy can be quite high.
Hope this solves your query!
Regards,
Fpguru.com
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