POSTED BY February 3, 2013 12:04 am COMMENTS (12)

ONI have taken LIC Janaraksha policy with a premium of 69000 for a period of 16 years. I have paid the premium for four years. Sum assured is 1100000. Can somebody tell me what will be the approximate amount that I will get at the time of maturity?

Dear Karthik, when you do know that current term cover is not sufficient, why are you not purchasing more cover?

Thanks

Ashal

Thanks Ashal. Apart from this policy I havent taken any other.

Have written article on surrendering a policy which has information on how to calculate surrender value with information on bonus rates of LIC also. Quoting from

Surrendering Life Insurance Policy

Surrendering the policy means exiting from the policy before the maturity. It is the voluntary termination of the insurance contract by the policyholder before the maturity or premature encashment of the life insurance policy. On surrendering a policy:

The life cover or protection ends.

The tax benefit, if availed of on the premium paid till then,may be reversed if surrendered before premium has been paid for two years and 5 years for ULIP products after the date of commencement of policy.

On surrendering before the maturity date the cash value that you receive is called the surrender value of a policy.

Policies usually acquire a surrender value after premiums have been paid for three years.

If any extra premium is paid towards riders such as Accident benefit etc, it is usually excluded.

The surrender value is calculated by the insurance company depending upon the time for which the policy was in effect (the age of the policy), the total duration of the policy, the premiums paid and any bonus accrued.

If the policy is in its initial stages (3-4 years old) the surrender value is only about 30% of the premiums paid plus any bonuses that may have accrued till then. The closer you are to the maturity date of your policy, the higher is the amount you get when you exit. Towards the end of its term, this can be as high as 80% of the premium. Even after three years, during the early stages of policy the surrender value is just a fraction of the total premiums paid.

The surrender value factor is a percentage of paid-up value plus bonus. It is zero for the first three years and keeps rising from third year onwards. It differs from company to company and depends on various factors. There are two types of surrender value

Guaranteed surrender value and

Special/cash surrender value

Special surrender value is arrived at by multiplying the total paid-up value (paid-up value + bonus) with a multiplier called the surrender value factor. The surrender value depends on a factor (known as surrender value factor!) and it depends on the age of the policy and bonuses offered and is heavily insurer dependent. Not all companies declare the surrender value factor in the product brochure or on their website.

Dear Karthik, what about your term insurance cover?

Thanks

Ashal

Thanks a lot for the response.

I am planning to start a sip in hdfc top 200 and shi mutual funds

Dear Kathik, below is the link for bonus rates for all policies of LIC. If you feel that your life insurance is not sufficient, why are you not taking steps to increase it? Please clarify.

http://www.licindia.in/bonus_info.htm

Thanks

Ashal

Thanks for the reply. Yes I also feel that the amount is not sufficient. I also invest in PPF @ 5000 per month.

I feel it is necessary to add some more products to the portfolio.

Can u give the link because I am not able to get the link for Janaraksha bonus rates.

Dear Karthik, do you feel 11L Rs. sum assured which is not more than 13-14 months’ income, is sufficient for your family if you are no more today?

Bonus rates are given in the LIC site. You may just google the same. I can directly provide the link for bonus rate but I want to discuss more this policy with you if you permits, that’s why I’m not offering direct link.

Thanks

Ashal

Can u provide the link where the Yearly bonus will be declared in the LIC site

Thanks for the response. I bought this product mainly as a Tax saver and my income is in that zone only

Dear Karthik, Paying 69000 Rs. for a sum assured of 1100000 Rs. is really a good idea for your family? Please think – how many days your family can survive out of this 1100000 Rs. if you die today? Based upon your prem. paying capacity, I assume that your income is in 8-10L Rs. yly zone if not more.

Please answer.

Thanks

Ashal

This depends on the bonus rate declared each year which will change. You need to find this from LIC website.

Assuming an average bonus rate of Rs. 40 per Rs. 1000 sum assured

the maturity value will be

1100000 + 40*11000+loyalty additions if applicable + final additional bonus

last two quantities are not know until maturity.

You should check if the policy will help achieve your financial goals

Use this to check

http://freefincal.wordpress.com/2013/02/02/insurance-policy-surrender-value-paid-up-value-calculator/