In the tax filing season, many people go ahead and buy insurance policies just to save some tax. And it is only after a couple of years that they realise that the policy is too expensive to maintain. Worse still, there are situations when you realise that a market-linked product is giving extremely low returns vis a vis your equity fund, simply because of the high costs. Many financial planners would advise you to immediately exit such policies and invest the premium in equity funds.
Yes, in some cases, there would be a loss. But it’s better cut your losses sometimes than to lose big. A typical sales pitch for buying insurance, besides the tax saving element is guaranteed returns promised by traditional products like endowment or moneyback policies or as mentioned before, market-linked returns in case of unit-linked insurance plans (Ulips).
