Could you please advise me what should I do with the below ULIP policy which I took in Sep 2009

ICICI Prudential LifeStage Pension Plan is a Unit Linked Pension Plan (ULPP). Unlike traditional insurance plans or Unit Linked Insurance Plans (ULIPs), the surrender proceeds of Unit Linked Pension Plans are taxable. Further, you have to pay back the 80C benefits claimed by you on this policy over the years, if you surrender an Unit linked pension policy before surrender.

We cannot comment on the conversation you had with your insurance executive. If you surrender your policy, then you have a tax obligation as discussed above. Maybe, your insurance executive may recommend that, you switch to other portfolio strategies (fund options) within the same plan. ICICI Prudential LifeStage Pension Plan has multiple investment / fund options, but we cannot comment if one fund or more fund options are definitely better than the others. You should know that Unit Linked Pension Plans are subject to market risks. In any case, if you are invested in a pension plan, please note that on maturity of the policy, only one third of the maturity proceeds is commuted and available to you in lump sum (tax free). The balance is invested in an annuity plan to give you pension, but your pension income is taxable as per your income tax slab.

In the last 7 years top performing ELSS Mutual Funds have given a tax free XIRR of 15 – 19% (please see our Top Performing SIP Mutual Fund Plans - ELSS Funds), as opposed to the 9% XIRR that you have mentioned in your query. If you are ready to bear the surrender charges and tax consequences discussed in the first paragraph, you can surrender your policy and invest in tax saver mutual funds (ELSS), so that you can get income tax savings like your insurance policy. You need to make a decision, based on your own financial objectives. If required, you should consult with a financial advisor.