Well i have bought this hdfc unit linked pension plan way back in 2005.

At that stage my financial knowledge was zero.I had just open an account with hdfc and they sugar coated this policy to me stating ill get 22-28 lakh something with some 6% chart return stating 2.9 lakhs in 29 years will turn 20+ lakh something.

As i was not aware of this compounding tool and just got washed in their words of 2.9 lakhs turning 20 lakh something i went for it.

Now in year 2010 i became aware in 2034 20 lakh would be something what 1-3 lakh rupees is now.Hence i wont be getting much.

I dig my pension document than i came to know that 20 lakhs is also not guaranteed but an example with 6% return compounding was shown.

I realised my mistake and decide to withdraw from the plan.My last 5th year installment was pending.

I dig internet further.Found that one should keep investingin ulip atleast for 5 years to surrender.So i made the 5th installment.

Luckily even after paying yearly premium of 10,000.and getting 6000 rupees invested in first year.My returns were 70,000 rupees.

Also i used to claim deduction on this payment.

I used to get receipt under 80ccc.

I further dig information about the policy.

Another stuff which i found out was whenver i make premium payment ,say 1st january 2012.My due date being 23rd march 2012.The money wont be used to invest untill the premium dates was near close.That is last week of due date aroun 20th march 2012.So if the markets are high on those dates i'll get less units.

So finally i found it not that user friendly.I decided i'll exit from it.

Just for sake of tax treatment i searched and the heart attack came.If i surrender policiy on whom claim have been claimed under 80ccc.Whether surrender or term completed all the investment will be taxed .

In short if i surrender the policy now i have to pay tax by adding the income to my account and tax at indiviual level.

I avoided it for 2 more years and continue with premium.

Now again the premium due date is close soi am rebalancing my portfolios and i came across this.

So again i revaluated my policy.

8th installment is due.7 premiums of 10,000 each paid.

Total 70,000 rupee paid as installments.And luckily right now today the surrender value is around 1 lakh 2000 rupees.It was 90000 few days back(30-40 days).

So now i planned to exit the policy as i was making my heart ready for 90000 rupees few days back and pay 9000 as tax on it.But now i am almost getting same 90,000 in hand.But here comes another bomb.My tax output this year will be on 4 lakhs 75000 rupees.So i add this income 1 lakh 2000 ill have to shelve out.17900 as tax on this policy withdrawal.

I asked prudent about same and his reply have made me to stay invested in it or atlest as reduced paid up mode.

But again the biggest drawback i see is after investing and staying long is to pay tax on annuity or surrender value.

Than why not invest in ppf or some other tax saving instrument or even mutual fund where investment turn tax free in a year.

Also another thought is to avoid tax angle by just claiming cheque and depositing in some spare account encash it and close the account wihin a year or 2.

But again my past capital account statement will show i was claiming rebates on same and one expense entry going less from insurance.

What do you guys suggest?