I have purchased LIC Jeevan Aadhar (₹75,000 yearly premium) two years ago. Should I continue with it? What should I do to discontinue it?
Jeevan Aadhar is an insurance plan meant for those with a handicapped dependent. The plan provides life insurance cover throughout the lifetime of the purchaser. The benefits under the plan are for the handicapped dependent which are partly in lump sum and partly in the form of an annuity. This policy offers a guaranteed addition of 10% of sum assured for each completed policy year. The Guaranteed Additions will accrue up to age 65 of the life assured or till his/her death, if earlier. The policy will be entitled for Terminal Additions if at least 10 years premiums have been paid at discretion of the insurance company.
10% of sum assured per year sounds good enough as it is guaranteed but, the drawback is that it will be done only till 65 years of age. Another limitation is that most of the sum would be paid as annuity at the then prevailing annuity rates. Future annuity rates are uncertain. Benefits under the policy will be payable to the handicapped dependent only after demise of life assured. If life assured is alive at age of 90, he disabled dependent will not receive any benefit under the plan. This is a major concern. The policy is for the protection of the dependent handicapped person, after the death of the life assured.
This policy does not pay anything on maturity. It does not allow you to surrender. This policy has some stringent conditions. Talk to insurer and get rid of this plan if you can. Or stop paying premiums and forget the sum already paid.
It is always better to invest in a well-rated diversified equity mutual funds to meet long-term financial goals. Start switching your funds to debt when you are 3 to 4 years away from your goal. You may then opt for a systematic withdrawal plan (SWP). This would provide your dependent a regular sum for his expenses. Click here for best diversified equity funds.