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POSTED BY ON December 2, 2010 3:32 pm COMMENTS (8)
Hi Team :
I have Jeevan Tarang policysince 2006
For which I pay annual premium of 29k for SA= 500000 + I would get Rs 2500 monthly lifelong i.e. 30 years after accumalation period. This info given by my agent . I was told this is pension plan.
After learning here i feel I should stop it.
Go for Term insurance & save rest in equity/PPF
My Queries
1) will I get my paid premium back?
2) What will I lose
3) What are gains
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I am a central govt employee in hyderabad and my spouse working in tcs as a SE. Together we draw around 52k pm net. We identified a 139 sq yd independent house (resale) in gram panchayat, hyderabad. We have requirement of 27 lak home loan. We approaced hdfc, icici. they said as per our income we eligible for 27 lak but they said property also must have the value but it is 20 yrs old construction and the market rate is Rs.20k per sq yd. One of my neighbours got home loan from uco bank for the same location and got 18 lak HL for 125 sq yd and uco bank took 19200 rate per sq yd. Now please tell how can i get 27 lak home loan and which bank is the best bank???? Please note next year govt will give 7th cpc to central govt employees.
Manish,
I have made a comment on Sajit Zacharia’s querry on surrender value of Forever Life plan of ICICI. That is also a traditional plan. If you read that, the flow of the logic would be clear. The play between surrender value and the paid up value is even better for a insurance product than it is in a pension plan.
If required I can take a specific product; let’s say a 20/30 year endowment plan and look at how the paid up strategy pans out in comparision with surrendering the policy altogether and investing the surrender proceedings in eighter debt or equity.
shashank
Dear Shashank.
I wold like to make my policy as “Paid Up” after paying 3yrs premium.
My doubt is LIC charges a fine of Rs.500 for not paying the premium.
Will they continue to fine Rs.500 until the policy matures every year upto 20yrs?
I mean, How are they handling the fine, if we make the policy “Paid Up” & during maturity time.
Thanks for your help 🙂
Dear Thiyagutt, once the policy is marked as paid up, no more such penalty ‘ll be there.
Paid up itself means that you have already paid the required dues & no more dues are there on you.
Thanks
Ashal
As a general rule , it makes more sense to make a traditional savings plan ‘paid up’ than surrendering it. When the paid up value is considered and compared with the surrendered value, the amount is quite high. So if we take out the surrender value and try to invest it in lumpsum even in a asset class which is going to give high returns, still it would equal the paid up value many years down the line. If the death occurs within coming ten years then the paid value is going to be more i.e. the death benefit would me much more than the value of the investment where we might be parking the surrendered money. Also as the surrender values’s growth rate is low during the initial years of the policy and which speeds up later on at a faster and faster rate; it is not so wise to replace even a paid up insurance asset with a alternative investment whether in equity or in the debt class like even PPF with the surrender value. (THE INSURANCE LOGIC IS VERY TOUGH TO BEAT).
My advice :don’t surrender the policy. Make it paid up i.e. just stop paying the premiums from next year. The proportionate base cover alongwith the bonuses accrued so far would remain as cover.The available budget can be utilised for aquiring sensibly high covers if over last four years’ period your incomes/ savings haven’t grown substantially.
The PPF+ term criterion looks attractive because PPF is a goverment run scheme where higher yields are paid even if nor affordable to the govt.(Once you start thinking beyond the typical 70000 figure used for this comparision then only you can appreciate the role of the traditional savings plans. Because now you have only FDs/ Bonds/Debt MFs only to combine with the term insurance and suddenly the scenario is not attractive at all as it was seeming to look in term+PPF combo. So what to do incase of individuals who are already putting in 70000 in PPF and also are not interested in increasing the equity participation in the portfolio further from whatever level they are at?) .
The insurance plans are not good or bad in themselves. It is the relative placement in the portfolio and also how you are using the budget for insurance and how rest of the money/savings are being utilised in totality is important.
Shashank
Can you give workings for Suhas case, which shows that making it paid up is better than surrendering and investing the money in balanced or pure equity for next 15-20 yrs ?
I would like to get convinced on this ? Or you can give some other example ?
Manish
Suhas
You will get just 30% of your premiums paid minus first year premium , so considering you paid 4 premiums , you should get around 30k total today if you surrender it , It might be a worthwhile decision !
Read this http://jagoinvestor.dev.diginnovators.site/2009/08/review-of-jeevan-tarang-policy-from-lic.html
Dear Manish
I understand it must be hectic to reply to all queries
I appericiate reply.
Thank you
Yes I found earlier reveiw of JEEVAN TARANG on JAGO when I googled .
Has really helped & cleared my thoughts.
Now since I hv already paid this years premium in Nov ,I shall cancel policy next year.
Also by then DTC provisions would be clear for TAX exemptions
I saw somebody mention in comments of JEEVAN TARANG Review that it may fall in EEE category ,once DTC comes
What you think?
Keep up the good work .God bless u