Guidance with my existing LIC policies

POSTED BY Senthil ON March 12, 2014 2:00 pm COMMENTS (27)

Hi, I have 4 LIC policies (Jeevan Anand,Jeevan Saral, Jeevan Sathi and Jeevan Ankur). I had these just to fill my 80C category and to make some savings which will be useful for future.Lats year I got a home loan of 25L and about INR 40000 goes for Principal amount itself under 80C and now i am paying more than 1L in 80C.Now I am feeling bit pressurized with all my income spent on policies which are future and feeling I am loosing my presents\’.

For these LIC policies I am paying around 60K yearly whereas my 80C has only 20K balance after my PF and Principal addition.So I am thinking of closing/ surrendering/making paid Up some of the policies so that I can get some breathing space.

Can any suggest on how to proceed with the surrendering of policies.following are the details of my polices.

Jeevan Anand – SA 100000 – 20 yrs – Commenced on 09/2007

Jeevan Saral – SA 500000 – 10 yrs – Commenced on 01/2011

Jeevan Saathi – SA 200000 – 20 yrs – Commenced on 01/2011

Jeevan Ankur – SA 450000 – 18 yrs – Commenced on 04/2012

Also would like to know whether it worth surrendering/making paid up or should I carry on with the payments and finish the tenure.

27 replies on this article “Guidance with my existing LIC policies”

  1. ashalanshu says:

    Dear Senthil, you may invest in IPru Dynamic also if you wish so.

    Thanks

    Ashal

  2. ashalanshu says:

    Dear Senthil, you can increase your existing SIP or start new one as per your own wish in future.

    Thanks

    Ashal

    1. Senthil says:

      Dear Ashal, apart from this Quantum Long term Equity fund, i see that ICICI Prudential Dynamic Funds are also performing well over a long term. Please suggest your view on these funds as well. So that I can think of diversifying the investments.

      Thanks,
      Senthil

  3. ashalanshu says:

    Dear Senthil, please invest in Quantum Long Term Eq. fund and they ‘ll do the job for your KYC. No need to open Demat account.

    Thanks

    Ashal

    1. Senthil says:

      Thanks for the response Ashal. I went through the Quantum website. It shows Quantum Long Term Eq. fund is in brown category (High Risk).
      As my financial position is not balanced now, and also there is plenty in my plate (Home loan EMIs, couple of personal loan EMIs, Jewel loans as well 🙁 ) now which I have to close first. So i would like to start from a lower amount as of now. Is there possibility to increase the monhtly investment thereafter, say from next year.?

      -Senthil

  4. ashalanshu says:

    Dear Senthil, as you are an existing demat account holder, you are already KYC verified.

    Regarding direct investing, please start with Quantum Long Term Eq. fund and you w’d be happy for the response you ‘ll get from them as Quantum AMC is fully online AMC.

    Thanks

    Ashal

    1. Senthil says:

      Dear Ashal, I don’t hold any demat account as of now. I was saying that I am going to open one with ICICI as i hold a savings account in that bank. So it means I am not KYC verified yet? So shall I proceed with the demat account from ICICI or is there any othereway to get KYC verified without much effort form our side?

      Thanks,
      Senthil

  5. ashalanshu says:

    Dear Senthil., let me try to answer your query.

    1. I have stopped paying the premium from this month for 3 policies which are completed 3 yrs.From my calc I have paid around rs.1,49,500 till date for the 3 policies. I opted to leave them paid up. So Is it advisable to take the amount at their maturity or should I opt for surrendering the policy and invest the amount whatever I get, in something else to get better profit out of that small amount.?
    the answer to get is very simple. First of all check for surrender value. Now calculate can you create more value from surrender value against paid up value by investing the surrender value in the instrument of your choice and keeping the investment till the policy maturity (paid up value is available)?

    2. I am not sure how the vested bonus will be added to my paid up policies.can u suggest how its done at the time of maturity?
    Once a policy is paid up, no more bonus ‘ll be added except final additional bonus if any. Final additional bonus ‘ll be known only in the year of maturity and subject to LIC’s own policy on final additional bonus at that time.

    3. Will I be getting the amount which I paid till date plus the vested bonus or ‘ll be getting some interest for that as well.?Whether it will be more than whatever i’l get if i invest from the surrendered amount?
    Please read my answer 2 above.

    4. According to the replies I saw in this forum and get to know that 30% of the amount paid thru premium sub the 1yr premium is the amount i’ll get if surrender the policy after 3yrs.So i calculated it to be around Rs.39000. current amount invested thru premium plus vested bonus as of now sums upto rs.2,09,000. So are there anyways i can use the surrender amount to increase the profit more than 2,00,000 in next 10-15yrs without adding any more investment to it.
    Please demand for a paid up value as well as surrender value quote from LIC to understand what I mean.

    Thanks

    Ashal

  6. Senthil says:

    Hi Ashal, I have some additional queries on my existing policies.

    1. I have stopped paying the premium from this month for 3 policies which are completed 3 yrs.From my calc I have paid around rs.1,49,500 till date for the 3 policies. I opted to leave them paid up. So Is it advisable to take the amount at their maturity or should I opt for surrendering the policy and invest the amount whatever I get, in something else to get better profit out of that small amount.?

    2. I am not sure how the vested bonus will be added to my paid up policies.can u suggest how its done at the time of maturity?

    3. Will I be getting the amount which I paid till date plus the vested bonus or ‘ll be getting some interest for that as well.?Whether it will be more than whatever i’l get if i invest from the surrendered amount?

    4. According to the replies I saw in this forum and get to know that 30% of the amount paid thru premium sub the 1yr premium is the amount i’ll get if surrender the policy after 3yrs.So i calculated it to be around Rs.39000. current amount invested thru premium plus vested bonus as of now sums upto rs.2,09,000. So are there anyways i can use the surrender amount to increase the profit more than 2,00,000 in next 10-15yrs without adding any more investment to it.

    I am throwing all these queries to you experts, because I am poor in maths :), so as to help me to plan my future financial portfolio.So that I wont regret later setting my foot wrong.

    Thanks,
    Senthil

  7. ashalanshu says:

    Dear Senthil, why are you opening demat account just for MF investing?

    Thanks

    Ashal

    1. Senthil says:

      Dear Ashal, I came to know that one of the way to invest in MFs is demat account. Other options are thru agency or by direct investment in AMCs. Hope I got it right.

      Is there anything wrong in my thinking? Or have I missed anything for consideration?

      Thanks,
      Senthil

      1. ashalanshu says:

        Dear Senthil, purchasing or investing in MFs through demat account ‘ll be a costly affait as you can not invest in direct funds there. Hence lower earning on your investment.

        Thanks

        Ashal

        1. Senthil says:

          Dear Ashal, I am aware that investing directly in AMCs has lower expense ratio, but I have no knowledge in MFs to frequently watch and react accordingly. So I decided to go for Demat account. Also the main reason for selecting this option in to get KYC verified easily, that will help me to invest in AMCs later.
          Thanks,
          Senthil

  8. Senthil says:

    Dear Ashal,

    I am planning to create a demat account in ICICI as I am laready holding a Joint account in ICICI. So if I open the Demat account will that also be Joint or it can be opened only to my name?
    Also if I created the account and KYC verified, do i need to start the investment immediately on creation of the account?
    Since I am a beginner i am planning invest in debt funds. With ICICI account, I’ll be able to inevst only in ICIC debt funds?

  9. ashalanshu says:

    Dear Senthil, please read the MF related articles here in the main JI site. If your family’s pressure is more important than your d’ter’s own future, please follow your family.

    Thanks

    Ashal

    1. Senthil Kumar says:

      Ashal, Can we make a policy paid up even it has not completed 3yrs of ite tenure? I am asking this because the Jeevan Ankur policy is just 2 yrs old and I need to pay the next quarterly premium next week. So if making paid up is possible I’ll stop it right away. Also should we inform LIC that we are not going to pay the next premium an d making it paid up so that we won’t be getting multiple reminders asking us to pay the premium.

      Thanks,
      Senthil

      1. ashalanshu says:

        Dear Senthil, inform in written to LIC that you are not going to continue the policy. You ‘ll get nothing in return. In case LIC decide to give some peanuts at the end of regular term, accept the same. 🙂

        Thanks

        Ashal

  10. ashalanshu says:

    Dear Senthil, what is required? The money for the D’ter’s education expenses or the policy? I know you w’d say money. Now as the answer is money, then the focus should be to earn return on your money with comfortable risk. Please do note in case of LIC policy also, returns are not guaranteed as the bonus rates may change from here on wards in future.

    Even a simple PPF account ‘ll yield higher return for your d’ter’s education expenses.

    For your personal life insurance needs, there should be adequate term cover for your life.

    Thanks

    Ashal

    1. Senthil Kumar says:

      Hi Ashal, Yes I’d go for money as that is my current requirement. I have some queries on MFs.
      1. As my chances of taking risks are vvvvvvv-low now, I would like to get to know all abut Mfs and then want start will small amount intially. So Whats the minimum amount I can invest in MFs?
      2. How or Where can we start inveting in MFs?
      3. Can we increase our monthly commitments towards MFs after year or 2 when my salary gets increased?
      4. As I am beginner to MFs i dont think I’ll have knowledge to select the MFs and invest mu funda accordingly. So naturally I have to choose an Agent/Agency. So can u pls suggest em a trusted agent/agemcy whom I can contact?
      5. What r the pros and cons in having Agent track/invest our MFs?

      Also My family advices me to cont with the Jeevan Ankur which i took for my daughter. I am paying 5089 (with serv tax added) as quarterly mode.Its for 18yrs term which started from 2012. So approx 1700 Rs /month i’ll get if I make that policy piad up. Please advice whether it worth continuing or pls show me some calc which I could use to convince my family to redirect that amount to something useful where returns is more than the policy.

      Thanks for the responses,
      Senthil

  11. ashalanshu says:

    Dear Senthil, nothing wrong in your thinking. Before suggesting anything to you, I should be able to understand your situation and thinking so that I can offer only what is good for you. Coming back to your situation, in normal thinking, how much gold you want to gift to your d;ter at her marriage in next 20Y or so? (I assume, marriage ‘ll happen at her age 23 at least, hence 20Y from here on wards)

    thanks

    Ashal

    1. Senthil Kumar says:

      Ashal, as I mentioned paying 60000 for LIC policies.Out of that Jeevan Ankur,which i took for my daughter considering her higher education is contributing 20000. My wife and relatives advice not to close that as it will be helpful for my daughter’s furture educational purpose. But I thought of closing it and investing effectively somewhere else, so that I’ll get some more additional benifits out of that amount ,after reading several of your forum replies.
      Still I am confused whether i decide the right thing to close that policy. Or continue with that poilicy alone and close the rest of them and use the same to save for my Emergency cashings and further go on for investmets

  12. ashalanshu says:

    Dear Senthil, w;d you like to purchase Gold today or after few years at the time of actual need? Incase of term cover, please opt the insurer you are comfortable with.

    Thanks

    Ashal

    1. Senthil Kumar says:

      Ashal, Just as I said in my earlier comment, I am thinking to save money for my daughter who is now 3yrs old. I didnot mean to invest in Gold alone, but I thought anyway my daughter will be requiring Gold for her marriage, then thought why can’t plan that for it.

      I want to invest the amount effectively so that it will secure my future after my retirement ,as I won’t be getting any pension, as I am in Pvt sector.Also want to save some money for my daughter’s higher education and her marriage. Think this is a normal mindset that every midlle class father has 🙂
      Thanks,
      Senthil

  13. ashalanshu says:

    Dear Senthil, please do not opt any shop offered gold plan. Why? Please read the articles over internet as well as in main JI site. Yes your basic understanding about term cover is correct.

    Thanks

    Ashal

    1. Senthil Kumar says:

      Hi Ashal,

      I went through some of the Term plans and got quotes too. I am working on concluding the company for my term plan.Do you have any suggestions on that?

      Also my knowledge about trading and Demat is Nil. So I am little hesitated to think of online Gold trading/Gold ETFs.Is there any place where I can get good picture of what’s happening there.

      Thanks,
      Senthil

  14. ashalanshu says:

    Dear Senthil, surrender value ‘ll be available only in 2007 and 2011 policies. In my personal opinion, first of all purchase a term cover of at least 15 times of your yly income + home loan amount. After that surrender all these policies. The prem. paid by you towards term cover is also eligible for section 80C benefit. So your remaining amount ‘ll be very less out of 20000 Rs. and same can be adjusted by parking some extra amount in to your PF as VPF.

    Thanks

    Ashal

    1. Senthil Kumar says:

      Hi Ashal, Thanks for the suggestion. Will proceed with the process for closing my existing policies.
      I am new to thinking about investments as I never felt the importance of it earlier. I had no idea of Term cover polices. When I gone through some of the forum replies I get to know that we pay some prepmium for relatively higher coverage for a longer term. We dont get any refunds/payback form it as long as we are alive 🙂 its only for our family after we pass. Hope my understanding about the term cover is correct?
      Also I would like to invest the amount (After closing the current LIC Policies) on some gold plans offered by jewellery shops so that its useful for my daughter’s furture. Is it worth now to invest in Gold plans like that or are there any alternative for the investing part that would secure my family’s future?

      Thanks,
      Senthil

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