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POSTED BY ON December 5, 2012 11:35 pm COMMENTS (4)
Hi Manish
I have a Tata AIG Nirvana policy for 2.5lakhs pension+2.5lakhs additional accident coverage, with a premium of 11,538/- for 21 years (started in 2004 & maturing in year 2025). At the end of 21years, I get around 33% lumpsum & rest as annuity for life at the ‘rate prevalent at that time’!
I have paid 10 annual premiums, around 1.2Lakh, already. Did a simple math as suggested in your blog and found that the net yield once the policy matures, will be at least be ~30% less than if I deposited the current policy Surrender Value (~1Lakh) & remaining premiums till 2025 in FD.
Please let me know of your thoughts on whether there’s any error in my calculation and whether it makes sense to surrender the policy right away & invest the surrender value elsewhere than continue paying premiums for another 10+ years.
Awaiting feedback from the more experienced rest of you too.
Thanks for all your insights!
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Thanks a bunch, Ramesh! That clarifies things quite a lot.
1. In terms of portfolio and other investment things, it seems that these 2 policies are your main things. These policies are mostly debt products, and their overall return is going to less. I would advise you to get into a major learning mode about the basics of investing via forum threads, books (like Manish’s or any other). Unless you educate yourself in a proper manner, things are never going to be clear for you.
2. For the specific query, shifting from one debt product (in this, your policies) to another one like a FD (which is not tax friendly) is not recommended by me. Shifting around within the same asset class will not be beneficial for you in the longer term.
3. So, you should only shift from this product to something else, if there is a major difference in asset class, otherwise not. And for doing that, you need to understand the pros and cons of various asset classes and their long term behavior.
4. Presently, you should not change them at all. Their 10 year long value is quite decent and losing that without gaining anything will not be my suggestion.
Read up, learn, ask, think and re-learn. Then you can come and ask more.
Also, since you are taking a break, I guess you will have plenty of time in your hand for thinking and learning. Good luck.
Hi Ramesh,
Thanks for yoru response.
It’s 1 of the only 2 insurance polices I have. Another is a Mahalife Gold which I will complete paying for in next 5yrs.
I have taken a break from work and was rethinking on whether to continue investing in Nirvana for another 10+years with 11.5k+ every year.
Your suggestions & opinions are welcome.
1. How much is this policy as a percentage of your total portfolio?
2. What is the current status of rest of the portfolio ?
3. How are you managing the rest of it, in present and future ?
these questions should be answered first.