LIC Jeevan Anand isn't a policy worth investing in. Find out when and how you should surrender this plan if you have invested in it
11-Aug-2014 •Research Desk
I have taken the LIC Jeevan Anand plan and pay Rs 26,000 annually as premium. I have paid 2 premiums till date. The term is for 21 years. But now I have come to know that LIC Jeevan Anand plan gives only 5% annual return. I want to surrender the policy. If I surrender the policy now, I don't get anything in return. I talked to the LIC broker and he told me that if I pay 5 premiums I will get the entire money back. I don't believe him and want to know from you how much money I will get back if I invest in LIC Jeevan Anand for 5 years before surrendering my policy? Rather than investing in LIC I want to invest ₹26,000 in a tax saving mutual fund.
Please help me.
- Chetan Saxena
LIC Jeevan Anand is not a recommended policy and as you said, the returns on it are quite low. As a long-term investment, it is unlikely to beat inflation. Refer to the below link for more details on LIC Jeevan Anand Policy.
This policy can be surrendered at any time. However, if you surrender it before completion of three years, you will not get any sum in return. On surrendering after three policy years, the insurance company will pay a guaranteed surrender value equal to 30% of all premiums paid after deducting the first year's premium. Let us calculate your loss in both the cases.
Case 1: If you surrender now, you will incur a loss of ₹52,000.
Case 2: If you surrender after third year you will incur a loss equal to ₹62,400.
You made a wrong choice while selecting this policy for tax saving purposes. The only choices you have now are to either compromise on returns or forget about premiums already paid to surrender the policy. We think it would be better to surrender your policy and limit your losses now itself. In some cases, the insurance company may also pay a special surrender value which will depend on the duration for which premiums have been paid. However, no quantitative details of this are available in the policy documents. Nowhere do the policy documents say that the entire money will be refunded if you pay premiums for five years. The agent seems to be making misleading claims, to earn his commission.