Tuesday, March 27, 2012
What to do with Reliance Health Insurance??
One Reader Mr.S wrote "I am regularly paying annual premium in Reliance Health + Wealth plan for the last four years. The fund value at present is equal to the premium paid. The lock-in period of 3 years is over. I am getting income tax benefit with this plan. Please advice me which is better-- to pay further premiums or withdraw partially and invest in MFs? My family did not have any hospital benefit claims till date from this policy."
SRIKANTH SHANKAR MATRUBAI REPLIED :
This policy is a combo of usual mediclaim policy & ULIP. This Policy combines health insurance with investment and pay back an amount at the end of the insurance term. The returns of course are dependent on market performance.
Being a ULIP the charges are pretty high.
The Fund Value would depend on the performance of the investments made by the fund. please remember that the fund charges here in this fund are different and hence, a combination of simple Mediclaim policy and Mutual Funds would be a definite winning combination
Just investing for sake of Income Tax benefit is a wrong idea.
And moreover, you will not get very little profit out of it, you have already completed locking period of three years, so better you come out of this and seriously consider investing for long term in MUTUAL FUNDS, you will get much better profit out of your investment.
It is always advisable to go for a Pure Health Insurance Cover and a Term Plan.
For returns, mutual funds are the BEST alternative.
WHAT TO DO NOW??
1. Ensure you have a cost effective Term Insurance Plan.
2. Surrender this ULIP, and invest into good MFs for the purpose of long term investments.
The same effect of mediclaim & saving can be achieved by purchasing a cheaper mediclaim policy as well as investing the surplus amount as per our comfort level in Eq. or Debt funds or anywhere else. So this policy should be avoided by Short Term and Medium Term Investors.
Only very long term investors who are salaried people can look at this policy and that too in Moderation. They can also have a serious look at ICICI HEALTH SAVER which is more or less similar.
My choice for Health Insurance would be a toss up between Max Bupa Heartbeat and Apollo Munich Optima Restore.
For Term Plan, the choice would between Kotak Preferred Term Plan and Birla Protector Plus.
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