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POSTED BY ON July 13, 2012 1:36 pm COMMENTS (12)
Hi,
I have 2 policies one is Reliance trad. superinvest assure plan and other is Birla vision plan.
I pay yearly premium 30000 of each. Also my husband has Birla Dream endowment plan which is ULIP plan and premium is 60000.
We have completed 3 yr lock in perion in June 2012 of all policies.
Now we are realised these policies are not good at all.we are really frustated with these policies.
Is there any sence to continue or should we surrender all.
how much loss we get if we surrender all
Please suggest.
desparately waiting for replies.
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1. Making mistakes early are better than making them later.
2. Identifying that you have made a mistake, is a great first step.
My views on your current situation:
1. Very expensive EMI+rent load. But still you must be having some spare money for investments.
2. You have already completed your 3 years lock-in in June12. Make sure, your premium payment does not hit you till next year now. Going through the policy documents will take time, but mostly, I am not in favor for endowment type of investment policies. Even the Birla Dream plan with that much expensive premium is a problem. Mail to the respective companies, about the possibility of decreasing the amount of premium as low as possible, without incurring any charges or making the policies as paid-up or lapsed. Mostly, the newer policies have a 5 year lock-in, but really depends on the individual policies.
In all, you are definitely not going to pay that much amount of premium in any of the 3 policies.
3. Get a decent health cover. If your company or his company provides it, well and good. Skip this step then.
4. Next get a decent proper life insurance cover. Go for iterm / icici, since they do not require medicals and 50-75 lakhs each is more than enough for each of you two. Overall, you require a lesser amount of life cover since both of you are working. This cover is mainly to cover up the big liability of yours, namely the home loan.
5. Start putting money in a short-term debt mutual fund and partly cash in bank account. Check fundsindia.com or contact an AMC directly. I suggest Franklin Templeton because of their wide range of decent products. HDFC is another one. This money has to manage your Contingency fund / Emergency fund (whatever name you feel is good). Basket 1 for Emergency funds.
6. Basket 2 for Short term goals like daughter’s first birthday (4 months down the line), and other important things which are in next 1-2 years. Start accumulating money in a short-term bond fund for this.
7. Once, you have filled up baskets 1 and 2, you start basket 3 for your longer term goals. Mind you, seeing your current situation, it may take a few months before you can start filling up this basket. For this basket, on the basis of your learning and your own power of risk taking ability (I would atleast advise a 60:40, if not 70:30 ratio of equity and debt funds). You can start with 1-2 equity oriented funds and 1 debt oriented fund.
Overall, this is what I feel should be the roadmap. You still need to learn things slowly and surely. Involve your spouse.
And please write things up for yourself. And the particular reasons for that.
Keep learning and investing.
Ramesh
Thank you very much Ramesh and Ashal for your valuable time and support.
Ashal ,we get possesion after 1.5 yr. Actually, our full EMI is not yet started . it is growing as per the disbursement. we are collecting our remaining money so that we can give it to the Builder directly which will lower our loan burden. are we going in right direction?
Dear megha, collecting money to pay builder to bring down the loan burden? Am I missing something here? Please clarify.
thanks
Ashal
Ashal , As per the construction we get demand letter from a Builder .when we get it ,we pay our money or will give it to the bank so that bank can disburse it. but we are trying to pay it from our side .
e.g, If we get demand letter of 5 lac and we have collected money 3 lac then we give it to the builder and 2 lac asks from the bank.
Dear megha, in my opinion, you should pay from bank to the builder. After all what’s the use of loan if you are not going to utilize it? In case you are not comfortable with the high interest burden, use this surplus amount to pay back your loan.
Thanks
Ashal
Check these two comments of mine (and the same threads).
http://localhost/jagoforum2/financial-planning-for-a-late-starter/4021/#comment-14333
http://localhost/jagoforum2/financial-planning-for-a-late-starter/4021/#comment-14309
Please understand, telling you about these two/three policies is not the Solution, that will be just patching.
Also check what is the surrender value of these two plans. (That will not be a good sight at all)
Ramesh
” telling you about these two/three policies is not the Solution, that will be just patching.
” .
Ramesh I really agree with you. But very late we come to know the imp of financial planning. To correct our mistakes, we need to do something with these policies which are annoying us.Then only we can do financial planning according to other threds which you are suggesting.
kindly help us on the same.
Desparateness and hurriness are very bad for financial health.
Doing things immediately usually means you have not given much thought about that, which is potential recipe for disaster.
Check what is the role of these policies in your overall investments (portfolio). Is the rest of your portfolio decent enough.
Start from basics, which have been outlined a number of times in this forum. Check those out, discuss with your spouse, clear your doubts, and then progress.
Ramesh
Thanks ramesh for your reply.
We both are confused with these policies. we have purchased home and paying EMI of 45000. we don’t have any other investment other than company’s EPF.
If possible please suggest on these policies.
Dear Megha, May I know some other details, like income of you & your husband? any other term cover etc. for both of you? mly expenses? Health cover? No. of dependents? family size????????
Thanks
Ashal
Hi,
our income details are :
my sal is 6lc pa and my husband’s salary is 7 Lc pa. we have 1 daughter 8 month old.
paying EMI for house 45000 and home rent is 10000 as we haven’t get possesson.
10000 is fly expenses.
we don’t have any health cover or investment plan at all.
Ramesh, surrender values of plans are ofcourse negative but my concern is ,is there any sense to continue as we are investing lot of amount in that.
we haven’t started any SIP because we don’t have much idea on it and we have already invested in policies.I know SIP plays big role in investment but without stopping one of the policy we can’t any new plan.
Dear Megha, May I know possibly when the possession of your house ‘ll be with you?
6+7L = 13L yly family income, translates into close to 90K Rs. mly income.
45K EMI
10K Rent
10K Fly expenses
7.5K Ins. Prem.
The above translates into 72-73K mly cash out flow? Where is the remaining 15-18K amount?
Please clarify.
Thanks
Ashal