Hello - I have 4 LIC policies. details as following 1 - Jevvan saral 12/2008. INR 1021 Mthly Pay till 11/2043. Maturity 12/2043 SA 2,50,000 2 - jeeval saral 07/2007 to 07/2042. inr 15,162 HLY. SA 6,25,000. Matruing Dec 2043. 3 - Jeevan Mitra Triple cover 04/2003 - 04/2033. Premium inr 3731 annually SA 1 lakh 4 - Jeevan Anand 11/2003 - 11/2027 premium 4176 annually SA 1 lakh. Pl advise if I should retain or surrender? esp the jeevan saral ones. Not sure how the expected return will look like? I guess the preduction the the agent was v optimistic when i purchased.
Ans: You have held these LIC policies for a long time.
You have been disciplined in paying premiums.
That shows commitment and patience.
But it is also important to assess if they are helping you build wealth.
Let us do a complete 360-degree assessment from a Certified Financial Planner’s view.
This will help you take a confident and informed decision.
Your Existing LIC Policies – A Summary Review
Policy 1: Jeevan Saral (started Dec 2008)
Monthly premium: Rs.1,021
Sum Assured: Rs.2.5 lakhs
Maturity: Dec 2043 (35 years term)
Policy 2: Jeevan Saral (started July 2007)
Half-yearly premium: Rs.15,162
Sum Assured: Rs.6.25 lakhs
Maturity: Dec 2043 (36.5 years term)
Policy 3: Jeevan Mitra – Triple Cover (started April 2003)
Annual premium: Rs.3,731
Sum Assured: Rs.1 lakh
Maturity: April 2033 (30 years term)
Policy 4: Jeevan Anand (started Nov 2003)
Annual premium: Rs.4,176
Sum Assured: Rs.1 lakh
Maturity: Nov 2027 (24 years term)
What Needs to Be Evaluated in Your Policies
Total premium paid so far.
Number of years left for maturity.
Guaranteed maturity benefit.
Bonus declared each year by LIC.
Internal Rate of Return (IRR).
How Jeevan Saral and Other LIC Plans Really Perform
LIC policies are mostly traditional endowment-type products.
They promise guaranteed returns and bonuses.
But the real returns are usually very low.
In most Jeevan Saral cases, final returns are between 4% to 5% per year.
Some even get less than 4% IRR.
That is much below inflation.
Why Jeevan Saral Needs Serious Review
LIC stopped selling Jeevan Saral.
There were many complaints about maturity mismatch.
Projections made by agents were often too optimistic.
Agents showed high maturity values which were not guaranteed.
In reality, maturity depends on age at entry and term.
Older policyholders often got very low maturity values.
Your Jeevan Saral Policies – Key Concerns
One policy has Rs.1,021 monthly premium for 35 years.
The total premium paid will be nearly Rs.4.3 lakhs.
Sum assured is only Rs.2.5 lakhs.
Expected maturity can be Rs.5 to 6 lakhs depending on bonus.
But that means less than 5% return for 35 years.
Second Jeevan Saral policy has higher premium of Rs.15,162 half-yearly.
Total paid will cross Rs.21 lakhs by 2043.
Sum assured is Rs.6.25 lakhs only.
Even with loyalty additions, returns may remain under 5.5%.
What About Jeevan Mitra and Jeevan Anand?
These are older plans with low sum assured.
Jeevan Mitra offers triple cover but investment value is low.
Jeevan Anand continues coverage even after maturity.
But it is of no real benefit unless it is for life insurance need.
Premiums are small, but the returns are not attractive.
Total investment is locked in for long term.
Big Issue – Mixing Insurance with Investment
LIC policies combine insurance and investment.
This is not ideal.
Insurance should give protection only.
Investment should create wealth.
Mixing both gives neither good coverage nor good returns.
Why You Should Surrender – Analytical Assessment
Your goal should be wealth creation and financial protection.
These LIC policies give low returns.
Real return after inflation may be zero or negative.
Even if held till maturity, returns remain weak.
These funds are better used in mutual funds with CFP guidance.
What Happens If You Surrender Now?
All your policies have completed more than 20 years or close to it.
That means surrender value will be higher than early years.
LIC will give you guaranteed surrender value plus bonuses.
In most cases, surrender gives 30% to 50% of total premiums paid.
But if you reinvest wisely, you can recover this gap.
The earlier you surrender, the faster your wealth creation begins.
Reinvestment Strategy – 360-Degree View
Surrender values can be reinvested into mutual funds.
Use actively managed equity funds with long term view.
Always invest through a CFP and MFD, not in direct plans.
Direct funds do not offer help or regular review.
Regular funds via CFP give guidance, rebalancing and emotional support.
Why Not Direct Funds? Key Disadvantages
No one to support during market fall.
No plan to shift asset when goals change.
No help in tax planning.
No family guidance in your absence.
Most people stop SIPs or withdraw in panic without advisor help.
Returns in direct funds may look high, but are rarely achieved.
Why Not Index Funds Also
Index funds copy market blindly.
They can’t protect from downside.
They don’t shift allocation during market bubble.
You get average market returns only.
No active fund manager to add value.
Good active funds have beaten index consistently in India.
India is not yet a mature market for passive investing.
What You Must Do Now – Action Steps
Take surrender quotes for all four LIC policies.
Check exact surrender value and accumulated bonuses.
Do not delay. Every month wasted is loss of growth.
Consult a Certified Financial Planner and execute surrender with confidence.
Shift the proceeds to mutual funds under long-term plan.
Allocate funds based on your risk level and goals.
Use SIPs and STP for reinvestment if large corpus.
Do You Need Insurance Now Separately?
Buy a term insurance plan for full protection.
Term plan is pure cover, no savings.
Premium is very low for large cover.
It is best way to protect your family.
Final Insights
You have kept the policies for long. That discipline is rare.
But continuing them will not create meaningful wealth.
LIC policies serve purpose only for guaranteed returns and simple safety.
But they don’t grow your money fast.
You should not mix insurance and investment.
Surrendering is not a loss. It is a correction.
Mutual funds offer better returns, more flexibility and full transparency.
You will also get better control of your money.
Your money must work for you. LIC policies are not doing that.
With right CFP guidance, you can recover and grow faster.
Start now. Every month delayed is growth lost.
Take smart decisions. Not emotional ones.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Venkatesh on Dec 26, 2022English
