For the last six years I have paid annual premium of Rs 1 lakh on a Ulip. The value of the fund is barely Rs 6 lakh. Should I continue with this policy?
Vivek Simha, Bangalore
Ulips are combination products that mix investments and insurance. The investment component is subject to market risks if you have opted for equities as an asset class with the fund option you have selected. As the investment risk is taken by you as the policyholder, the non-performance of your investment in the Ulip is something you should have factored in when signing up for the policy.
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As you have already paid premiums for six years, you should evaluate the fee structure of the Ulip for the remaining tenure. If there are no penalties in stopping this Ulip, you should consider doing so than stick with a product which will always balance between insurance and investments. If investment was the only reason why you were attracted to Ulips, you committed a mistake—you should look at investments independent of insurance or any other addition. This way, you will be able to use your money smartly only towards investments and not be torn between the two different objectives.
