I have a Jeevan Anand policy. I just realised that it is hardly of any use. The sum assured is not much (₹15 lakh), while the premium is close to ₹80,000 per year. I have paid six premiums and now I know that I am better off investing this money somewhere else and get better return and take a term policy instead. What are my options? People mention making the policy paid up. Is there a specific procedure or paperwork required for that? Please advise.
- RJ
LIC Jeevan Anand is a combination of endowment and whole life plans. It covers you against death throughout the lifetime with a provision of paying a lump sum amount on survival and at the end of the chosen term.
This policy is costly and lacks transparency as well. These type of policies do not even beat inflation, even a bank fixed deposit will give you better guaranteed returns.
You can consider surrendering this policy. You will incur a loss, but it will save you further losses. Since you have completed six years, the guaranteed surrender value will be 30% of the premiums paid minus the first year's premium.
Converting the policy into a paid up policy will lock your money for the term of the policy. However, you can contact the insurance company to find out about the paid up amount. Compare it with the surrender value and compare the returns you will get in a bank deposit for further clarity and to take an informed decision.
Term plan is all that you need to financially secure your dependents. For your long term investment, you must always choose equity mutual funds based on your risk tolerance.
This article was originally published on March 14, 2016.
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