I have a Bajaj AllianZ UNIt GAIN policy 15k premium 3 yrs lock in..to continue or not?

I have a Bajaj Allianz UNIT GAIN policy ,Rs 15k premium annually with lock in period of 3 years purchased in march 2008.When inquired with company the present value is approx 5,500 Rs.Now my payment is due next month.I want to know whether i should continue with the payment or not and what are the losses i have to incur in case i discontinue???

I have a Bajaj AllianZ UNIt GAIN policy 15k premium 3 yrs lock in..to continue or not?
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3 Replies to “I have a Bajaj AllianZ UNIt GAIN policy 15k premium 3 yrs lock in..to continue or not?”

  1. Your decision to buy ULIP was not right. ULIP has many different charges that needs to be kept in mind. Allocation charges are highest in first few years. Your fund value fall not only because of market fall but because of initial charges.

    To get any surrender value, you will have to pay premium for 3 years. Check policy document about the surrender value. I could not find unitgain policy on their website as it is discontinued. In new Unit gain plus, they have 65% allocation charge in first year & 4 % from 2nd to 5th year & then 2 % till 13 year.Also 630Rs. per annum is administration charge.

    Also “If any due regular premium is not paid within the grace period in the first three policy years,the surrender charge would be equal to the First Years’ Allocated Premium.” So you will get nothing if you will not pay premium in march (2nd premium). If you do not pay 3rd year premium, they will deduct first year allocated premium. Even after 3rd year till 10th year, there is a formula to calculate surrender value & you will get anywhere betweeen 94% & 99% of fund value.

    Now the fight is to save the 5500/- left with insurance company. To get anything out of this money, you will have to pay premium for 2 years (30K). There will be charges applicable to this.

    4% towards allocation — 1200/-
    administration for 2 year– 1260/-
    surrender charge (5%) — 1500 (assuming a fund value of 30000 after 3 year.
    Service tax on all these charges — 500/-
    (I am not considering mortality charge as this charge is deducted to insure your life & you get a benefit due to it)
    Now it completely depend on market that how this policy will perform in future. So you can not assume today what will be exact fund value.

    Decision should also depend on one important factor. What you will do after surrendering this policy??? Will you buy another ULIP???

    If answer is yes, you will have to pay the higher initial charge again. What is the fun in making the agent rich by your money.

    If answer is no, how you will insure yourself & what you will do for investment? The best way to insure yourself is term insurance & best way to save is mutual fund. but you will have to be disciplined in your approach. If you can can not remain disciplined, continue in this ULIP for complete term (if you have any long term plan)

  2. Bharat has explained it reasonably well. Since it is a longterm investment you may get a reasonable return on maturity. Opinions may vary but in your case it is like jumping into the pond without knowing how to swim and then asking somebody how deep it is !!!

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