When To Exit ULIP?

Most of us buy & sell ULIPs based on the unsolicited advice of the insurance agent. The agent would convince us to buy a particular ULIP plan (and get 30% commission on it) and after three years come back with a new plan to replace the existing one (earning another 30% or so). The only person who gains through all this is the agent himself.  With the buy & sell going on, most of us want to figure out which ULIP is the best to buy. You would get countless writings on web on this subject. So, for a change, let’s try to figure out when to sell/exit a ULIP plan. Here are some conditions which will justify your exit from ULIP.

Money Crunch – You may need to surrender a ULIP if you have serious money crunch. In addition, you may realise that you can’t afford the premium. In this case you should preferably stop paying ULIP premium instead of surrendering the policy.

Poor Performance – You may like to exit a ULIP if it is consistently performing bad in comparison to the market. Though it is tricky to say when a ULIP qualifies for this, you should generally see the performance of a ULIP for few years before deciding. There could be exceptional cases where in a boom year your ULIP gave a return of 5% while other ULIPs gave a return of 25%. But then be sure about the poor performance of you ULIP before exiting it. Not an easy feat by any measure, I must say.