Skip to main content

Guidelines to Sell Ulips

Tax Saving Mutual Funds Online

Current open Infra Bond Application form

 

Here are some guidelines to help you decide what to do with the Ulip policy you already hold


   Volatile equity markets have not spared even insurance policyholders, especially the unit-linked insurance policy holders, as most Ulips have the option to invest as much as 90% in equity. If you have chosen to invest in Ulips just for 5 years, or as a short-term trading instrument, you cannot afford redemption. The cost structure of Ulips is so high in the initial years that there is limited scope to a make profit. In fact, you may be even staring at some losses in the initial years. However, this does not mean you should never sell your Ulip holdings. But before pressing the exit button, you should do a thorough evaluation of your policy and its performance to decide whether to stay invested or quit. Here are some pointers.

Don't Exit After 5 Years

You have to pay the premium only for five years is the most commonly used sales pitch and a myth propagated by insurance agents who are out to dispel clients' resistance to purchasing a product with a long-term financial commitment. While the IRDA regulations permit you to withdraw after 5 years, it is often incorrectly used as a USP by agents, who do not explain the negative consequences of such premature withdrawals. Of course, unlike the older regime of a 3-year lock-in, surrender charges are not levied under the new regime but the fund value may still be 'underwater' (i.e. lower than the premium paid.

Invested At The Peak 21,000 Levels

An investor needs to realise that if it is only a timing error, it will get sorted out over time. They need to check the performance of the fund in which they have invested with the benchmarks. If it is better than the benchmark, then it would be a good fund (and Ulip) to retain. If not, you should exit and reinvest in various other investment avenues. You should be aware of the pros and cons of investing in Ulips prior to purchasing them. Ulips are not guaranteed products. Hence the market risk has to be borne by the policy-holder. This is compounded if you opt for a single premium Ulip as it does not offer any scope for rupee-cost averaging, unlike a Ulip where the premium is paid frequently (monthly/quarterly or annually). If you want to indulge in market timing, you may switch to a less equity oriented option if you are apprehensive of the market corrections, and then switch back into the equity option once the correction has played out. Of course, this is easier said than done.

Fully Paid Up A Better Option Than Selling Ulip

Once the initial allocation charges were paid, most Ulips which were sold in the past did not have high allocation charges in the later years. If that be the case, then investors could continue paying premiums. Loss or profit would depend upon how the markets behave.


However, in case allocation charges are high even in later years, then it would make sense to make their Ulips fully paid up and invest an equivalent of the annual Ulip premium in equity mutual funds, without any entry loads as well buy a term insurance policy.


However, if you convert a policy into 'Fully Paid Up' status, the life cover too proportionately reduces. Hence ensure that you have an alternate policy which offers adequate life cover and consider Ulips primarily for investment purposes.
In case of a Fully Paid-Up Policy, you can stop paying premiums. But the policy itself will still be active with the insurance company for the time being. It continues to earn interest and has a certain cash value based on where the funds are being invested. This policy can be in the fully paid up status till maturity. In case of premature withdrawal, you can surrender the policy to receive a cash value of the Paid-Up Policy.


You may exit a Ulip if there is consistent underperformance vis-à-vis its benchmark; there are constant fund manager changes or you wish to consolidate your insurance policies. However, you must weigh the impact cost of such withdrawal vis-a-vis the monetary impact of continuing to pay the premia for the entire tenure of the policy.


The bottom line is Ulips are long-term protection cum investment vehicles.

Investment returns can be volatile in the short-medium term. You should not take a very narrow or tactical view with Ulips and invest/divest on a short-term basis as you may do with a trading portfolio. If the individual is likely to invest in equity/balanced products, then it may make sense to stay invested since the bulk of the upfront costs in the Ulips would have been charged already and from here on, it may be quite beneficial. If the individual wants to exit equity altogether, this was not the right product to start with.

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

Submit filled up application Collection canter near you

Popular posts from this blog

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l

IDFC Premier Equity Fund dividend

  IDFC Mutual Fund   has announced dividend under the dividend option of   IDFC Premier Equity Fund Direct-D . The quantum of dividend shall be   R 4.3464 per unit.   The record date has been fixed as May 06, 2015. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot]
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now