Pros and cons of continuing with Aviva Freedom Life Advantage - 5 yearly premiums paid

You have not provided sufficient details, like you age, sum assured, premium, fund selection etc in your query. We will discuss some general features of this plan and you can decide your next course of action on your policy based on your investment and insurance needs, in consultation with a financial advisor, if required. Aviva Freedom Life Advantage is a simple Unit Linked Insurance Plan (ULIP). At the very outset we should say that, in Advisorkhoj we believe that, term life insurance is the best form of life insurance. We also believe that, Life Insurance and Investments are two separate financial needs and should be treated as such. Now, with respect to your ULIP policy, there is a Limited Premium Payment (LPP) option of 5 years. If you have opted for LPP you can discontinue your policy, since you have already paid 5 yearly premiums. If you discontinue your policy now, you will get the fund value.

Let us now discuss, if you should continue your policy beyond 5 years. One advantage of Aviva Freedom Life Advantage is low cost. If your annual premium is over Rs 1 lac there is zero premium allocation charge; otherwise it is 2% of your annual premium. The policy administration charge is 0.1% of the annual premium per month (subject to a maximum of Rs 400 per month). Fund management charges are 1.35%. Based on the above information, you can calculate what portion of your yearly premium will go towards costs and the portion that will get invested. Let us now come to fund performance. Most of the fund choices available in Aviva Freedom Life Advantage ULIP are not top performing funds, in terms of last 3 year returns. At best they are average performers. You should see your fund value and compare it with how much investment you made (premiums made) and then make a conscious decision, based on the factors discussed above.