My father invested some amount in the LIC market plus (181) Ulip Pension Plan. Now after the maturity period,he has been told that the amount has been vested and he has to purchase the pension on that amount. There are two options.
- Either he can use the commutation option on 1/3rd of the fund value of his units on the date of vesting and earn a pension on the rest of 2/3 amount monthly, quarterly or yearly whatever the option he selects for the life and return on purchase price on death.
- Or he can earn a pension on the full fund value vested amount for the life and with the return of purchase price on death.
I am thinking of commuting the 1/3 (although the amount is not that much and comes around Rs 55000),invest the lump sum commuted amount on some MF scheme and earn a pension on the rest 2/3rd for life which he is not ready to do as he is interested in keeping the full amount in LIC pension scheme since the
Can you suggest which option is better. (Commuting by withdrawing 1/3rd or keeping full amount) and if commuting the amount is the better option then where can we invest this lump sum amount?
It is hard for me to guide anything blindly. Because I am unaware of your father’s actual need. But do keep one thing in mind, invest in equity mutual funds only if you are ready to wait for more than 5+ years.
My father doesn’t need the money now and he can keep it anywhere. So in general, what would be better? To keep it in the ULIP fund or withdraw the 1/3rd of the total amount which is 50,000 and invest it in MF. Because in my view, in long-term the gain from Equity MF will be more than keeping in there in LIC pension fund and having just RS 3000 more pensions yearly. That is the difference in pension received yearly if he keeps all the amount in the pension fund.