Good Afternoon,
By chance I pressed the enter key & the query got submitted with no content. Sorry about that.
My query is:-
My name is Madhavadas. I am 55 years old. I have a ULIP invesment with ICICI Prudential (ICICI Prudential Elite Life II). The amount that I need to invest per year is Rs.200000/=. This was started in 2016. Premium paying Term 5 years & Policy term 10 years. If I pay premium for this financial year, it is the 5th premium payment. I paid for 4 years already. The invested amount is Rs.800000/= now & the current value is Rs.725000/= approximately due to the highly volatile condition in the market which I can understand. Even when SENSEX was at 42000, the value of my investment was only Rs.823450 in four years time. I would consider this as a under performing scheme.
I am covered for Rs.2000000/= until 31st of March 2020. If I opt not to pay Rs.200000/= by 31st March, I will loose my insurance coverage for Rs.2000000/= & I will not be able to utilise 80 C deduction fully. Is it good to stay with this scheme taking the above mentioned facts into account? Please let me know.
Alternatively, I am paying education fee for my two children which comes to around of Rs.87325. To utilise 80 C fully I need to in vest in a tax saving mutual fund (Rs.63000/=) approximatley.
Health insurance yearly premium comes to Rs.23774/=. This can be utilised for 80D deduction.
I have given Rs.5000 as donation out of which I can claim Rs,2500/= (80G deduction-I believe).
I am planning to invest Rs.50000/= in NPS before 31st of March.
I went for this ULIP because I did not have adequate insurance coverage. I am aware that I can might as well go for a term insurance coverage of Rs.1 crore probably for a lesser premium than this. I spoke to Kotak & after a long discussion the proposal was rejected with a silly reason citing (not employed or self employed).
I would appreciate if you can give me your best advice.
Thanks & Regards,
Madhavadas
9 Answers
Dear Madhavadas,
As you do not have life insurance coverage (adequate) suggest you to keep this ICICI Pru policy ACTIVE.
What is the 'fund' type/name that you have opted for in this ulip?
Read :
Mutual Funds Vs ULIPs – Which is better? | Post Budget (2018) LTCG Tax proposal on Equity Mutual Funds & Shares
May I know your source of income now? (As you have mentioned that you are neither employed nor self-employed).
Kindly plan your investments beyond tax saving as per your financial goals, risk profile and time-horizon.
Read :
Good Morning,
Thanks a lot for your response.
The fund type/name for this ULIP is Maximiser V (100% equity). An URL is attached with Maximiser V fund Portfolio. so that you get adequate information to give me your best thoughts.
I am not working as of now. My source of Income is from:-
1. FDs
2. Rental Income
3. Post Office MIS
4. SWP from (SBI Equity Hybrid Fund) which was doing very well prior to the lower circuit hit of the stock market.
I do have time deposit/RD in Post Office.
Appreciate your guidance.
Thanks & Regards,
Madhavadas
Hi,
Though I said, URL of ULIP is attached, I forgot to attach it. It is attached now. Please check.
https://www.iciciprulife.com/fund-performance/equity-fund/maximiser-v-portfolio-details.html
Regards,
Madhavadas
Dear Dear Madhavadas,
In ULIPs most of the charges are collected upfront and mostly in initial years..
Are you ready to wait till policy maturity date?and ready to take high risk?
Good Afternoon,
Thanks a lot again.
Yes. I can wait until policy maturity.
For a Term insurance of Rs.10000000/=, I got in touch with Kotak & eventually the proposal got rejected quoting a very silly reason "I am not employed by a govt.entity/private entity/self employed. I did send an email to IRDA yesterday to have more clarity on the subject.
In my ICICI ULIP, if I pay premium of Rs.200000/= on 31st March, this is the fifth premium that I am paying which makes my total investment in this ULIP to Rs.1000000/=. I do not have to pay premium for the next 5 years (5 pay-5 stay), & I am covered for Rs.2000000/=.
Following are the main reasons that came to my mind for keeping myself away from premium payment.
Performance of this ULIP was not sound even when the indices were at 42000. For an investment of Rs.8 Lacs, the fund value was 825000/= approximately which is really low as far as I can think of & in comparison with its peers performance for a similar period.
I can claim 80 C deductions fully if I take a NSC for Rs.67000/= or put the same in a Mutual fund. I have about Rs.87325/= already that is my children's education fee+my LIC policy yearly installment. The only thing on which I have a concern is the insurance coverage part whcih I wouldn't have if I do not pay the premium of Rs.200000/= this financial year.
Please advice.
Regards,
Madhavadas
Hi,
The markets are at lower levels, dont you think it really makes sense to invest in equity markets (pay premium of your ULIP)??
Suggest you to save/invest as per your risk profile and tax saving is only a value addition.
Dear Madhavadas ji,
May I know if you are a tax assesee?
If so, you can submit your ITRs as income proof for getting term insurance. But, considering your age profile and source of income, most of the insurers may not come forward to offer life cover at normal premium rates.
You may try with aggressive players like Aegon, Max etc.,
Good Evening,
Thanks a lot again for your suggestions.
As you have mentioned, markets are at historic low & it is a good time to invest in quality ULIPs/MFs/Stocks. Does maximiser fund V fall into that category? If so, it makes sense. I spoke to ICICI representatives today & asked them if it is possible to change the premium payment frequency to half yearly so that I can pay Rs.100000/= now & the rest after 6 months as the current market situation is beyond predictions. Just a small tweak. What is your say on this?
I am an income tax assesse. I informed Kotak about this. The proposal was rejected after knowing that I am an income tax assesse. Even if it is at a slightly higher premium, I believe, it is going to be cheaper than ULIPs.ICICI Ulip that I am into has the following charge structure:-
Premium allocation charges:-4% for 5 years
Policy administration charges:-Rs,4800/= per annum
Fund Management charges:- 1.35%
Roughly about Rs.25000/= will go against charges per year which makes the investment shrinks to Rs.175000/= approximately.
Appreciate your comments & suggestions.
Regards,
Madhavadas
In fact, the above charges have eaten up the growth. Other wise it would have been more when stock market was at its peak.
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