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POSTED BY ON May 14, 2012 10:29 am ONE COMMENT
I have 2 LIC money back policies (New Bima Gold of SA:15L for 30 years
paying monthly premium of 4556 from July 2009 & Jeevan Saral of SA:12.5L
for 25 years paying monthly premium of 5260 from Sep 2009), for which i have stopped
the monthly premiums, which was dedcuted from my salary at the source, as i
was falling short for my EMI of Home loan, when i calculated my outgo from
my income. But I have not closed them yet.
One conceren of mine is that, now i will not get anything out of these
policies. BIma gold policy gives 10% of SA i.e 1.5L every 4 years, which
will be next year in 2013, which also i will be losing on discontinuing the
policy. Should i continue it for 1 more year to get this 1.5L?
Regarding the policy in name of my 2 years old daughter (Jeevan Tarang of
SA:10L for 20 years paying monthly premium of 4220 from May 2010), its
features are that it will give SA on 20 years and thereafter 1L every year
life long to my daughter. I liked this feature of the poilicy at th time of
buying. Should i really discontinue it as it is in name of my daughter?
Will it be fine if i close these policies, ?
I am still doubtful????
What do you suggest?????
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Dear Arvind, for that D’ter policy, you are paying around 50K Rs. yly prem. At a conservative return rate of 7% yly, the maturity amount at the end of 20Y ‘ll be around 22L Rs. Out of this LIC is giving you only 10L Rs. & keeping 12L Rs. with it. Now practically it’s merely giving interest income from these 12 Rs. to your d’ter as survival benefit year after year.
Now imagine different scenario, you are investing those 50K Rs. yly (4220 Rs. mly) in a pure investment product like PPF. At a conservative rate of 8%, the maturity amount in PPF after 20Y ‘ll be 2471000 Rs. Your d’ter can withdraw those 10L Rs. as in LIC policy & remaining 14.71L Rs. ‘ll keep on earning money for her & this time, the yly income ‘ll be more than 1L Rs. obviously.
As the basic product in question was a debt based one (LIC policy), I’m not asking to invest the same 50K amount in to Eq. MFs but you can imagine yourself, what ‘ll be the value after 20Y if the avg. return from MFs are in the range of 11-12%.
Thanks
Ashal