Dear Sir,
I had registered for a couple of LIC policies in the year 2009 and 2010 with very high premium. Because of this high premiums I don't have enough spare money to invest in Mutual funds etc.
2009:
LIC Jeevan Tarang
Premium: 49220 per year
Term: 20 years
Death Sum assured: 10Lakhs plus vested bonus
Policy ends: August 2028
surrender says 30% of the premium paid after 3 years(that I met) - first year premium(49,220)
2010:
LIC Jeevan Saral
Term: 31 years
Premium : 72060 per year
Death Benefit: 15 lakhs + vested bonus
Policy ends: Nov2041
Surrender value 100% of premium paid after 5 years that I meet.
Following several blogs of yours I understood that having this kind of LIC policies is a waste rather we can go for Term Insurance plans.
Question 1: Should I surrender both the policies or the second one only at this point considering the first one returns very less.
Question 2: Once I get lump sum amount where should I invest to get return out of it for wealth building.
6 Answers
Hi,
Kindly note that it is not the case of LIC or any company, it is something to do with type of life insurance policies that one is investing in...
Traditional life insurance policies like Endowment or money-back are high cost and low yielding investments.
Kindly read:
http://www.relakhs.com/traditional-life-insurance-plan/
If you do not have adequate life cover, kindly buy a Term insurance plan and a stand-alone Personal Accident cover and you may then surrender these plans. (I am assuming that you have dependents..)
Kindly read:
http://www.relakhs.com/insurance-importance-life-health-accident-covers/
http://www.relakhs.com/best-online-term-insurance-plans-india/
http://www.relakhs.com/best-personal-accident-insurance-policies-in-india-details-comparison/
Thank you sir for your advice. Yes I do follow your blogs regularly through facebook and am updated on all your posting for last one year.
Your blog only made me think and encouraged me to surrender the endowment policies and go for the term insurance policies.
- What I am confused here is on the 2009 regustered Jeevan Saral plan does not pay me literally nothing on surrender. Then whether should I paid up this one for now or surrender?
- On the second one that was enrolled in 2010 Jeevan Saral , the agent confidently tells that that would return 10% including all the bonuses. Considering the present market if some debt investment gives 10% return that is pretty good. However the mentioned matured benefit is way way lesser . I googled a lot on the return of Jeevan Saral. The most optimistic return as per some blog says 6-7%which is not good. So I am kind of fumbling on what is the correct information.
- On your point yes my parents, wife and children are my depents. However on one of your suggested term insurace plans(icici ) covers accidental benefit as optional rider(life plus). So do you think I should buy accidental insurance seperately?
Dear Papai,
Thank you for reading my blog posts :)
1 - Better to correct the mistake than to compound the mistake.
2 - You may ask your agent to give a written assurance about 10% returns, if possible.
3 - Suggest you to buy a term plan with basic cover and then buy a stand-alone Personal Accident plan with disability risk cover.
Dear Mr Sreekanth,
Thanks for your advice. Just a couple of questions more on this .
1. 2009 registered Lic Jeevan Tarang gives 30% of the premium paid minus first premium on surrender.
So should I make it paid up or surrender .
2. 2010 registered Lic Jeevan Saral gives maturity benefit plus loyalty addition . Googling for it I did not get clear explanation as to whether it gets added yearly vs one time to understand the calculation of return. So once loyalty addition gets clarified I would able to calculate whether on 10th year( when I will be eligible for loyalty addition) or immediate(7th year) surrender will give me more benefit.
I really love reading your blog as it is very informative. Almost each and everything related to finance is being covered there. I really wonder seeing your vast knowledge on every area .
Thanks,
Papai
Hi,
As suggested in my earlier comments, if I am in your position, I will first buy Term plan and surrender these two traditional plans and book loses.
If you are too worried about the loses then you may make them PAID-UP and move on :)
Thank you for your appreciation!
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