Always buy a term insurance policy to buy a life cover. They are the cheapest option available to buy an adequate life insurance cover
23-Sep-2015 •Research Desk
I have a Jeevan Saral policy from LIC. I bought it in December 2009. The annual premium is ₹42,000. I stopped paying the premium from December 2014. My question a) is it right to recover the plan or not b) if I exit, what should I do with the corpus I have already accumulated. c) Which fund would better among SBI Small & Midcap-G, Mirae Asset Emerging Bluechip Reg-G, Canara Robeco Emerging Equities Direct-G?
- Somnath Maiti
Jeevan Saral policy is an endowment plan. Apart from the sum assured, Jeevan Saral would also pay a loyalty addition on maturity. But the wording "loyalty additions will be paid to policyholder on maturity depending on experience of corporation" is vague. That means you really don't know how much loyalty addition would you get on maturity. Also, endowment plans do not disclose details on expenses or investments.
If you exit the policy, you will get guaranteed surrender value, which is 30% of total premiums paid, excluding first year's premium and any extra premiums. This policy may pay you a special surrender value which may be slightly higher than the guaranteed surrender value.
Always buy a term insurance policy to buy a life cover. They are the cheapest option available to buy an adequate life insurance cover. As a rule, avoid insurance plans with investment element in them in future to buy life insurance cover.
You can invest the rest of the money in mutual funds via a systematic investment plan (SIP). You can invest in well-rated balanced funds if you are a novice to the stock market.
All three mid and small cap schemes you have named are among the best and they are a part of our recommendation list. You should consider investing in mid and small cap funds only if you can stay invested for a long period and tolerate high volatility.