Hi Sree -
I'm Siva. I came across your blog while searching for "Elite Life Super". I'm so impressed for the information you are sharing and helping the people. Good Job and I truly appreciate it.
So, here is my questions. Please advise.
When I was in India Chennai, I took 'ICICI Pru Life stage pension" policy in 2009 paying 50k/yr and still active. Recently, one of the relationship manager contacted me and advising/asking me to surrender that policy and buy "Elite Life super" with that corpus as it has more advantages like tax-free on returns & Life Cover.
I'm seeking your help to guide for good finance path.
Thank you!
3 Answers
Dear Siva,
Thank you for your kind and encouraging words!
A Pension life insurance plan is not a great investment choice. And what the is the reason mentioned by your RM for suggesting you to 'Surrender of ICICI Life state..plan'?
What is the remaining Term (tenure) on this policy?
It is “Life Stage Pension” policy. He is telling, I need to pay taxes on the returns and that’s the reason he is asking surrender the current policy and go for “ICICI Elite Life Super”. I need your suggestion whether it is good or not.
Policy Term is 21 years I started in 2009.
Hi Sree -
It is "Lifestage Pension" plan and the tenure is 21 years. I started that in 2009. On mature of the policy, I need to pay huge taxes on returns. That's the reason he is suggesting me to surrender the policy and switch to "ICICI Elite Life Super" which is internal transfer. It's a Tax free policy that he i s suggesting. I need to pay 5L for 5 years and wait 10 years for good returns.
Please suggest.
Thank you!
Dear Siva,
Looks like your RM might be mis-guiding you. There is no concept of Internal transfer in Insurance industry.
What type of taxes are they referring to on maturity?
In fact, if you surrender a pension plan, the tax consequences are severe.
From taxation side, the entire surrender value will be added to your annual income and taxed as per your tax slab. Also, you will have to pay back the tax exemptions you would have availed on the premiums paid until now.
If your investment objective is wealth creation, you may consider looking at Mutual funds instead of an ULIP plan like ICICI Elite.
In case, your objective is to get adequate life cover then you may consider buying a Term insurance plan.
Kindly go through below articles :
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