Yet another query on LIC Endowment policy

POSTED BY Hema V ON September 3, 2012 12:44 pm COMMENTS (4)

Hi,

I started following your forum regularly and have understood the perils of regular endowment policies. I wanted to make one of my policy paid up and had a call with LIC officer – i wnted to verify the same.

Endowment policy of SA 200000 , 18 years with yearly premium of 10703 started in 2007

Question 1) Surrender value is 35k, maturity value on paid up is 89k. I calculated 8% interest on 35k and it came to around same amount if invest for remaining 13years. So i am thinking to leave it as paid up – am i correct in my analysis? I am comparing this with a debt instrument returns like PPF as against the pains to go through surrender since the amount is not very high and i am not in need of it right now.

Question 2) Also the LIC officer did tell me that if i continue with the policy, i will get definitely 400000( and a little more mostly)  on maturity and that comes to 8%. Do you think his assumption is wrong?

 

Question 3) Bonus accrued in 5years is 33k till now. Generally it is likely that this bonus get accumulated at the same rate ( as opposed to power of compounding ) and i might end up getting around 3, 25,000 or max of 3.5Lakhs. Is my understanding correct or the LIC officer’s figures?

 

4 replies on this article “Yet another query on LIC Endowment policy”

  1. Hema V says:

    Thanks a lot for your answer.

  2. Hema V says:

    Policy is Marriage Endwt/education annuity with profit. I understand equity returns could be higher, i was asking if paid up can give avg ppf returns? Also if 8% returns are possible as quoted by Lic officer?( im not going to continue in any case but curious to know expert opinion.)

    1. Dear Hema V, the policy in question does not offer any gtd. return. You can check the same from LIC site itself. The policy can never match PPF unless PPF’s interest rate fall drastically but at that time, bonus rate of LIC ‘ll also move in tandem.
      In my opinion, surrendering & reinvesting the money elsewhere for remaining 13Y is your best shot.

      Thanks

      Ashal

  3. Dear Hema V, which policy you are discussing? Can you name this policy?

    From the given info, I w’d like to receive those 35K Rs. now & ‘ll invest in an Eq. fund for remaining 13 years (if I’m in your place).

    Thanks

    Ashal

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