Chat Transcript

11 Jun - 05:00 hrs

Deepak Yohannan | CEO, MyInsuranceClub.com

ULIPs or term plans?

Chat Transcript

guest: I have ICICI ULIP for SA 2 lakhs, besides having aviva term plan for 50lacs cover for 35 years. I Want to surrender ICICI ulip which does not give the good returns besides high cost involved. Can I surrender my ULIP and invest same in some Bank fixed deposit to recoup my loss of approx 25k on the ULIP which was done 3 years back. pls suggest

Deepak Yohannan: You can surrender the ULIP after 3 years. I am assuming you purchased this before Sep 2011. After you surrender you can invest the same in FDs. The maturity amount in FDs is taxable though. Get into ULIPs only if you have a 10 year horizon

guest: I have purchased ICICI ULIP 3yrs back and now i want to surrender the policy. The insurer is saying that i will not be getting the first year premium and can be surrendered with the surrender charges plus tax of the fund value. And after 5 yrs i will be getting the full fund value. Am waiting for the right reasonable amount and exit and reinvest in some debt mutuual fund or fixed deposits to recoup my loss over a period. Is my decision right?

Deepak Yohannan: The surrender value will depend on the specific policy which was purchased. You can surrender after 3 years. Check the policy document for the exact surrender value. The charge would be mentioned there. In case you horizon is short (< 10 years) mutual funds may be the better option.

sanjeev051: Dear Sir, I have LIC Money Plus Growth Fund with an yearly premium of 25k. Is this ok or should I exercise some option thereof? Regards, Sanjeev

Deepak Yohannan: Dear Sanjeev, very difficult for me to answer this question since you have not mentioned too many details. If you have the capacity to pay, stay invested in the plan. Definitely take a term plan if you already do not have one

guest: Hi I have a term insurance for 75 Lakhs with a coverage till my age of 50 and my age is now 30. My annual income is 8 Lakhs. Should I increase my cover now or I can consider increasing the cover at the age of 35 ?

Deepak Yohannan: With term insurance plans becoming really affordable one can look at 15 to 20 times your annual income. So you can consider increasing the cover amount. to 1 or 1.5 crores. Take it before the age or 35 as the premiums might increase with age. Also take a tenure which provides cover till the age of 65 and not 50.

guest: Sir, To cover insurance and good return on investment, I always use to take term policy and rest amount invest in Mutual Fund assuming which will give better return than Insurance. Is this strategy is good or are there any drawback of doing this?

Deepak Yohannan: Best strategy. Stick to it diligently! The only drawback is that with mutual funds you are not forced to make the savings as there is not penalty and generally you see people avoiding it as when they can or when the market is not performing well.

guest: I have a LIC policies since long but not much, all experts say do not mix investment and insurance, but if at all the public buy term insurance from all the insurance companies how will the insurance companies survive or pay claims when any major natural calamaty occurs. so how bad it is to invest in Insurance traditional plans.

Deepak Yohannan: Don`t worry about the insurance companies! Do what is best for you. They will survive! Not everyone thinks alike and there is a very small percentage of people in India who invest in stock markets or mutual funds. A large number of people still prefer safe insurance options even if the returns are low.

guest: Hello, Deepak. I want to buy the ICICI Pru term plan iCare since it gives you a fixed premium. So no need to worry about increase in premium after medicals. Would you recommend this plan?

Deepak Yohannan: Yes it is a good option. The premium is fixed and the process is very streamlined with instant policy issuance. Do declare all facts correctly in the application form

guest: Hi, What is the average return of the ULIPS over 10 year horizon? I have been investing 2Laks in several ULIPS over the past 3 years.I am planning to surrender the policies after 10 years.

Deepak Yohannan: Since ULIPs are market linked, it is impossible to predict a rate of return. However, just as in mutual funds the chances of better returns increase if the time period is longer. Also the charges in ULIPs decrease in the latter years. Keeping these factors in mind, invest in ULIPs if you have longer horizon

guest: I have invested a lakh in Reliance classic ULIP plan. I have my funds currently in corporate bond fund option. is it correct? When should I shift it to pure equity fund option?

Deepak Yohannan: If you plan to stay invested for the next 3 yrs+, move it to pure equity. Chances of returns will be higher. Bonds will not give high returns but will be more stable. So thats a call you have to take based on your risk profile.

guest: ULIPs are best suited for individuals of what age? Should young people go for ULIPs or not?

Deepak Yohannan: Since ULIPs perform better with longer tenure, the younger person will find it more suitable. As such there is no age criteria but avoid them if you are in age group of 55+

guest: Hi. i want to invest in a ULIP for 15 years. Is there a way we can compare ULIPs from various companies before deciding which policy to buy?

Deepak Yohannan: Comparing performance is very difficult. I would suggest go in for a plan with lowest charges. That is the best option. Comparing charges across plans by going to the individual brochures which each company provides. Charges are very clearly mentioned

guest: I have two insurance policy. jevan saral (12010premium) and jevan anand (15673). it start from 2010 jan. can i stop now. bcoz i am applying a home loan. i have also a jevan saral and bema gold policy.

Deepak Yohannan: You do not have a term plan, which means you will be terribly under-covered. So take a term plan immediately. It is all the more important as you are now taking a home loan. What will happen to the house, in case something unfortunate happens to you. Will the plans you have take care of the loan amount. If you stop paying before 3 years, you will get back nothing. Even after that, you will get back much lower than what you have paid. So better to take the call fast. Invest in insurance plans only will a long term horizon

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