Tuesday, September 23, 2008

what to do with my ulip

From: Bala N
To: sharesher@indiatimes.com
Sent: Mon, 18 Aug 2008 23:24:59 +0530 (IST)
Subject: what should i do with my ULIP?

Dear srikanth,

This is ramesh,aged 25,from chennai..

First of all, i like to thanks for your kind advices and suggestions..you are doing a great thing..please carry on..

I have already invested 50k per annum in SBI ULIP life insurance....but once i paid my first premium only,i got to know i was fooled by the agent..the charges are very much high(his commision???)..

now, i realize even after 3 years its unlikely, i will recover my invested amount(3 * 50k=1,50k)..

should i continue the ULIP after 3 years(by partial withdrawing & re-investing it into the same)for a long term until i get a good return or should i exit after 3 years, even if the surrender amount is lower than my invested amount(which is very much likely?)..so that i can use this amount for a good investment after 3 years?

also, please suggest some tax saving mutual funds to invest thru SIP.

waiting for ur suggestion..



Dear Ramesh,
It pains me to read such letters. I only hope people realise faster that ULIPs are money minting machines for Insurance Agents and a BIG LOSS for Investors. I repeat again Insurance is NOT an Investment.
But thankfully, you have realised now, so, hopefully, you will not repeat the same mistake again. And also advise your well wishers about this ULIP confusion.
I am not an Insurance Agent. But to the best of my knowledge and analysis, it is adviseable to stay invested till the lock in period of 3 years is completed. At the end of this lock in, do sell/redeem your units and invest in some Good Diversified Equity Funds.

As for Tax Saving Funds, here is my Short List. Invest in them through SIP to maximise returns.
Birla Sunlife Tax Relief 96 Fund (Invest through Century SIP now and you will get Free Life Insurance Cover)
DSPML Tax Saver Fund ( A recent fund, but has good returns and comes from a Good Fund House)
DWS Tax Savings Fund (Good performer. Free Life Insurance of 5 times your investment is an added Bonus)
Fidelity Tax Advantage Fund
HDFC Tax Saver Fund
Lotus India Tax Plan
Principal personal Tax Saver
Sundaram Tax Saver

Preferably invest through sips with different dates to take maximum advantage of NAV Volatility
Best of luck,
Srikanth shankar matrubai

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