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POSTED BY ON March 8, 2015 12:35 pm COMMENTS (3)
Hi All,
I have a Jeevean Saral policy(T.No. 165) in my name with Term of 35 years with sum assured of 1500000 started in 2010.I pay monthly ECS of 6125/- rupees (73500/- yearly ). I had thought it as a long term plan to be used for my retirement.But after reading various negative feedback after this policy, is it wise to keep it for long term?
Till now I have paid approx 3.2L in premium.If I surrender it after 5 years will I be loosing my hard earned 1st year premium with 0 or very less bonus incurred?
As suggested by the agent, I will get loyalty addition +bonus+ premium paid amount after 10 years.
So, if at all I want to surrender the policy , is it OK to wait for 10 years?Should I continue it for the entire tenure?what if I need some urgent fund in between?Please suggest guys!
Any help would be much appreciated.
PS: My AIM to take this policy was for retirement planning + 80C benefits or lump sum money after 15 years at least to meet my personal goal.
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rkgupta,
First thing i don’t understand the sum assured. 73500*35 = 2572500 which is way above than the sum assured you said (15L).
Do the calculation your own.
Lets say you get a surrender value of near to 2.5L.
Have an excel, Keep that as initial deposit. add monthly 6125 and calculate with 8% annually. If it goes more than the LIC sum assured you should surrender.
Note: A prude calculation would be to take a term insurance and reduce that amount (lets say yearly you pay 10k for term insurace) you will use 73500 – 10000 = 63500 as the yearly investment for the recurring deposit and calculate and see if it is going to exceed you surrender value. You are in early years of the policy, I am sure it will exceed way above the sum assured by Jeevan Saral.
Back of envelope calculations bring out following facts :-
1. If you compare with 8.5% returns you would get from provident fund, (both are tax free on maturity) you can accept to lose approx 2 to 4 L at end of ten years (LIC gives projections based on 6% and 10% returns . This loss reduces if the term increases say it becomes even at 20 years.
2. If you surrender after 5 years and deposit this money(less first premium) at 8.5% and continue with premium amount as yearly investment @ 8.5% then it would lose approx 1 lakh rs.
3. I would recommend that you continue this policy since returns now in the balance period will be more if you continue with the policy than surrendering at this stage.
4. This is a very casual calculation and you may like to verify yourself. I am also in same boat, having taken policy in 2011 and paying annual premium of rs 96080.
5. Will be happy to receive any input from your side and will take on any query you have
Thanks Aarkay for your detailed reply. Yes, I am planning to continue this policy, will see how much I get after 10 years with loyalty addition if any as claimed. Let c how it goes.Thanks again!