I am 58 years old and planning to retire in 2013. I have a few insurance policies for which I will have to pay annual premium beyond my earning days. Do let me know if it is worthwhile to continue with these policies.

Here are the plans I own : For LIC Jeevan Anand, the sum insured is Rs. 3 lakh and I am paying an annual premium of Rs 28,000. This policy is maturing in 2019. LIC New Jeevan Suraksha Pension Plan, where the annual premium is Rs 10,000 and maturity is in 2014. In addition to these, recently I have bought a ULIP from Max New York Life Insurance and my annual premium outgo is Rs 20,000 on this plan.

- Ravindra

It is uncommon to see some one buying an insurance policy, that too a traditional product, with a maturity period that extends well beyond retirement.

However, if you are considering exit, do note that traditional products are meant for long term savings and surrender charges on such products tend to be quite stiff.

For instance if you wish to surrender a policy after it has been in force for more than three years, the guaranteed surrender value is 30 per cent of the basic premium paid, excluding the first year premium.

Going by this, you are likely to receive a minimum of Rs 16,000 as the surrender value of Jeevan Anand and you will be losing close to Rs 68,000 from your investment.

If your income and expenses permit, do pay up the premium till the maturity. You can also ask any of your family members who will earn in that period, to contribute towards the premium.

Jeevan Suraksha being an annuity product, with your premium paying period only lasting till 2014, we suggest that you to continue with this policy too to avail pension.

ULIPs are generally not advised for investor who are close to retirement. It is a long term product. Pay the premium on this product for a minimum three year period.

Based on the net asset valve (NAV) at the end of the period if your investment is profitable and you require the money, you can close the policy.

If not allow it to grow without paying any additional premiums. If the NAV increases steeply due to exuberant market conditions, use the switching option and move the fund value to the debt plan.

By doing this the money you accumulated will be safe. Whenever an emergency arises you can withdraw your money without worrying about stock market movements.

I am 35 and purchased a ULIP last year, as a tax saving investment. It was sold to me on the following grounds: There are no charges, and after 3 years I would be able to get back Rs 5 lakh which was the sum assured, as a guaranteed return irrespective of market movement (I was also given a gift card then worth Rs 8,000 to reward my decision!).

On further follow up I came know, these features were not correctly told to me.

I also learnt that from my second and third year premium upfront charges of Rs 10,000 and Rs 3,000 will be deducted.

Recently I have bought a term plan after reading Business Line. I wish to know shall I complete my three years obligation with ULIP--considering the loss I bear on surrender now-- and then take a call at 5th year regarding exiting the ULIP. Do suggest which is best option.

- Dr. Ajay Khandal

We suggest that you pay the premia for next two years at the minimum and close the policy at the end of fifth year.

Under new IRDA regulations, surrender charges are capped, but ULIPs bought prior to this had higher surrender charges. So if you are unable to pay premium in annual mode do check with your insurer whether you can change the mode of premium from yearly to some other mode.

Besides that if you close the policy now the tax benefit availed last year has to be included in the current year's income and taxed accordingly.

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