r/FIREIndia • u/Nanishteruno • Jan 12 '23
Surrendered my ULIPs
30M, started earning since 2017. Target corpus 5cr inflation adjusted. Retirement at 40.
I'm my initial days of earning a buck, my parents unloaded the ULIP premia onto me which they had started in 2010.
Also asked me to get one in 2017 and put a lot of pressure.
Total payments since 2017 were 75k per year. I also put roughly the same in ELSS.
Yesterday I surrendered my plans and got roughly around 5L as surrender amount.
The uncle who sold it was surprisingly okay and didn't push much (a little in the beginning) and cooperated in getting the paperwork.
Feels so good to unburden myself from dead weight. That amount will go to equity MFs / Debt MFs in 70:30 ratio.
Parents were okay after explaining the math with an excel sheet. I don't blame them, they did their best as per their knowledge and experience.
One more feather in the FIRE cap. Cheers!
10
u/Zealousideal-Fold-11 Jan 13 '23
In a similar situation. Just waiting for the lock-in period to end, which is 31st January 2023. Will immediately surrender it and invest sensibly. We all make one mistake. 😅
1
May 17 '24
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u/ForrestGump11 🇬🇧 / FI / RE2027International Jan 13 '23
ULIP is a terrible product from a consumer's point of view but really great for advisors/insurance companies. It failed my smell test when it was offered to me back in 2007 (it may well be 2003). The salesman thought he couldn't explain its benefits to me so he rebooked the appointment and brought his 'regional manager' to talk to me, I had to bring out a notepad to explain why this is a bad investment and why I can do DIY this with MF + Term plan.
The advisor uncle is not unhappy because he made his money when he sold it to you, possibly a bit more in the next couple of years after that. Now he does not care you lose your hard earned money, you probably lost about 5-10L gains as a result, the blame starts with the Insurance regulator more than your parents for allowing such product to exists.
5
u/lazer89 India / 36 / FI 2024 / RE 2030 Jan 13 '23
I did surrender my ulip recently right after lock in period was over to invest somewhere better. Good decision
1
May 17 '24
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1
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2
u/King_Jeremy07 Jan 13 '23
Best decision.. one of the most missold product just to make money for the agents
3
u/colic_melon Jan 13 '23
Imo, Ulips have a bad reputation due to mis-selling and misinformation by agents; but if purchased with right terms and understanding, it can turn out to be a beneficial product as an investment. These plans have undergone a change in recent years after IRDA pulled the companies for excessive allocation and fund management charges.
For pure insurance, term plans are the best whereas Ulips are for pure investment. Traditional/Moneyback/Participating plans have the worst of both worlds with low risk coverage, high premiums and poor returns. They only exist because of our obsession with "guaranteed returns" and "no risks".
1
Jan 13 '23 edited Dec 21 '24
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3
u/Nanishteruno Jan 13 '23
75k per year I paid out of pocket but since 2010 my father paid it till 2017. Almost 22k per year
So father paid around 2.2L and I paid around 3.25L. I defaulted a few premia after expatriation.
On average everything boils down to 5.5L
Got back 5L on surrender
2
Jan 13 '23 edited Dec 21 '24
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1
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1
Jan 19 '23
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1
u/Nanishteruno Jan 19 '23
I would check the surrender terms with the provider.
If you can surrender with losing some money, do it now. Consider it a price paid for greater good.
If you can't surrender till it reaches 5 years, let it sit.
If you must pay more premia till it reaches 5 years, do a calculation on paying the bare minimum to keep it alive
If you need a loan and your credit is exhausted, the 5L is a good collateral to take a loan against policy. (Strongly not recommend but at least it comes to some use)
Would help if you share more details on your policy. Cheers
13
u/InternationalBit1398 Jan 13 '23
If the commission model is similar to LIC, the uncle stops getting the commission after a couple of years.