Three questions, same answer!
1. Subra I have been paying an annual premium of Rs. 10,000 for the past 7 years, but the amount accumulated in my ULIP policy is only Rs. 59,000. What should I do with the policy now? My agent tells me the upfront charges which were high have already been paid by you…so now the returns should improve. Is this true? The agent is my father’s friend and he is an agent with………………..
2. Subra I have been paying an annual premium of Rs. 100,000 and had kept the money in equity schemes till 2008. Then I shifted it to debt on the advice of my agent and even though I have paid premium for the past 6 years. My total premium paid is Rs. 600,000 and the amount accumulated is Rs. 649,000. Compared to my mutual funds (SIP) this is PATHETIC. When I had asked my agent he suggested an annual premium instead of a monthly premium. Now he is saying continue to pay the premium. What should I do?
3. Subra I have been paying a premium of Rs. 40,000 per annum for a ULIP for the past 3 years. I am disappointed with the FUND PERFORMANCE – apart from the high charges. What should I do?
Surrender the policies. All 3 of you.
The first case (let us call him A) is paying such a low premium that HE will NEVER make money on that plan! Why? Simply because there is an ADMINISTRATIVE charge of Rs. 60 per month – this translates to 7.2% of the premium! Then there is a 1% entry load, asset management charges of 1.25%, risk charges, etc. The way the charges are structured, people can make money in product either by being a manufacturer or a distributor. The holder HAS NO CHANCES of ever making money on this product. It is a CONSTRUCTION issue.
The second case (let us call him B) is unlucky because even though he is paying a premium which is high, he has a poor adviser. The switch was unnecessary, and sadly ill timed. Also he is with a company which replaced a good fund manager with a very poor one. This is hurting. I am suggesting B also to surrender the policy because of this fund manager. Now if you leave your money in one scheme for 30 years, it better be a good fund management team, not just an ordinary one. This brand, one hoped, could attract good talent, but alas!
The third question is by C. Please understand that if you are unhappy with a fund manager’s performance, it could be because of many reasons. However the last 3 year market / index has not been to great either. So compared to the index if his performance is poor, and charges are high, you might as well surrender it, right?
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