I was sold an AVIVA SAVEGUARD Policy in Dec 2006 through ABN AMRO which is essentially a ULIP with an Annual Premium of Rs. 24K & a tenure of 15 years with an Insurance Cover of Rs. 1.80 Lakhs only. While I was being sold this policy, I was told that the lock-in period is 3 years & I could then surrender the policy & as per the NAV as on the date of surrender, I would get the amount which would easily have a 15-20% return.
It’s now 2012 & I still have the said policy having paid Rs. 1.44 Lakhs in premium. The fund value as on 25th June, 2012 was around Rs. 1.39 Lakhs (Rs. 5K Loss). However, the surprising part is that the surrender value of the policy is only Rs. 1.19 Lakhs (Rs. 25K Loss). On further questioning, the customer service agent says that the surrender charges are levied till the entire term of the policy (15 years) with no recourse in case of early withdrawal.
If this wasn’t bad enough, what’s worse is that the surrender value is calculated as a percentage of first year units & subsequent year accumulations with the First year charge being 46% in the sixth year (this reduces to 42% in the 7th year & finally becomes NIL only after the policy term expires) & 9% on the subsequent year accumulations.
The people who sold me this dud have long disappeared & I’m left holding this piece of junk even after 6 years. In comparison the BSE Sensex was at around 13800 in Dec 2006 & is currently at 16K levels. Even if I’d put the money in equity (riskier supposedly) I would’ve got a got a return of 12-15% (absolute).
All I get after 6 years of staying with AVIVA SAVEGUARD & paying Rs. 1.44 Lakhs is a loss of Rs. 25K.
Please avoid aviva saveguard & especially the bancassurance channel insurance sellers.