Are you planning your retirement with an insurance policy? | Value Research Separate your insurance needs from those of investment and invest in instruments that align with your goals
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Are you planning your retirement with an insurance policy?

Separate your insurance needs from those of investment and invest in instruments that align with your goals

I have been investing Rs 3 lakh in LIC's Market Plus 1 plan since 2010. My agent has advised, under the given market conditions, it’s best to exit with the Rs 9 lakh investment and protect that amount. Should I move to a low risk product like LIC's Bima Budget?
-Leo Fernandez

Since LIC Market Plus is a Unit Linked Deferred Pension plan, we understand you bought this product to save for retirement.

You need your retirement corpus after quite a long time but need it for sure. You can buy the right investment product only if you are clear about your financial goals. For the same reason, it is important to thoroughly understand the objective of any product that you buy. We suggest, you do not buy another policy only to park your money in a safer instrument.

You have two choices now:
- surrender the policy and receive the fund value as on date of surrender
- stop paying the premium and the insurer will automatically deem the policy as surrendered, after two years

There are no surrender charges in either case. If you stop paying the premium, the cover will end after two years. For the two years that you do not pay premium, you will continue to enjoy life cover and rider benefits, and the insurer will continue to deduct applicable charges.

LIC Bima Bachat requires you to shell out Rs 67,000 for a Rs 1 lakh cover, and hence it’s a very expensive policy. If you need a life cover, go for a pure term plan because these are the most cost-effective form of insurance available till date.

We continue to stress on separating your insurance needs from those of investment. For your retirement and investment needs, you can consider investing through Systematic Investment Plan (SIP) in good equity funds or debt instruments according to your risk appetite and time available. Remember to switch to debt as you near your goal to protect the gains. And then you can take an immediate annuity plan to receive a regular amount.




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