I enrolled for LIC Jeevan Mitra policy in 2012 and have paid an annual premium of ₹47,950 which will be for a term of 30 years. Should I convert it as paid-up or continue the policy?
- Rajiv Prasad
LIC Jeevan Mitra is an endowment plan which is an insurance-cum-investment product. Such products are expensive, they mostly fail to offer adequate insurance cover and they also don't offer good returns.
Converting the policy into a paid up policy will lock your money for the term of the policy. You can instead surrender it. You will incur loss but surrendering will help you to stop a bad investment and earn better returns in a pure investment product. You can buy adequate life cover with a pure term plan.
The plan offers a guaranteed surrender value of only 30 per cent of the total premiums paid minus the first year's premium, which will be approximately ₹1,43,850 [₹47950)]. LIC may pay a Special Surrender Value which is either equal to or more than the Guaranteed Surrender Value.
You can contact the insurance company to find out about the paid up value. This paid up value will be paid out to you only at the end of the term of the policy. Compare it with the surrender value & compare the returns with a bank savings account interest to take an informed decision.
A pure term plan is what you need to financially secure your dependents in case you are gone. For your long term investment, you can buy a balanced or diversified equity mutual fund based on your risk tolerance.