Should I Surrender My Jeevan Anand Policy:Email Query


This post is based on Email query and is about LIC Jeevan Anand.Few days back I receive this mail from one of the visitor and he has provided few details:

Sum assured : Rs 10 lakh

Premium : Around Rs.5000/- per month.

Age : 32 Years.

Jeevan Anand plan was taken nearly 2 years back.

Annual Income : Rs 10 lakh.

Now he has understood that overall returns won’t be great and he is confused whether he should continue with the plan or not?

Such queries are in fact difficult to answer  as it can’t have some straight answer like Yes or no…Still we will focus few factors & I think he should consider following important factors before opting for any decision.

We will not enter into the details of this specific plan Jeevan Anand,but will have some generalized factors.

Its Level Premium:

Premium is e fixed for entire term..We will assume that income will grow at average of 6-8% but premium will remain fixed.So after few years one can easily accommodate this premium.

Do you believe Equity investment?

After paying premium for insurance plan if any one is comfortably investing in high return – risk products like Equity then don’t think there is any need to surrender this Endowment plan.

Also ask your self if you are going to invest in equity market for sufficiently longer period of time.Shifting from insurance plan to fixed deposits may not create much different especially for higher tax brackets.

One can take Add On Insurance:

Insurance from this plan may not be sufficient..But it may not be feasible reason to surrender the plan..Buy separate Term insurance around 1 Crore [apprx 10 times of annual income]

Finally, Its not necessary that we should compare returns of each instrument with real estate or something similar to it.One can’t make guaranteed money from equity or real estate.

BottomLine:

Don’t buy Fresh endowment / ULIP  plans but if you have already bought it then try to complete the term unless its creating conflicts with your other investment decisions like SIP in equity fund or buying home. 


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