Should I redeem my LIC Jeevan Anand policy after premium paying term?

Ans: Your LIC Jeevan Anand policy is a traditional endowment plan with a unique benefit structure. It combines both insurance and investment. The policy provides coverage during the premium-paying term and continues to offer life cover even after the term ends. This is one of the key features that differentiates Jeevan Anand from other endowment plans. You are paying premiums for 16 years, with the policy maturing in 2024, while the premium-paying term extends to 2029.

Maturity vs. Premium Paying Term

It's important to distinguish between maturity and premium-paying term. Maturity refers to the point when the policy reaches its end date, and you become eligible to receive the maturity benefits. In your case, this is set for 2024. The premium paying term is the period during which you need to pay premiums, which is until 2029.

Redeeming After Premium Paying Term

You mentioned that the maturity date is in 2024, while premiums are payable until 2029. If you choose to redeem the policy after the premium-paying term ends in 2029, you should receive the maturity benefits without any deductions. The full benefits include the sum assured, bonuses, and any loyalty additions applicable.

Waiting Until Maturity

Waiting until the policy matures in 2024 to redeem it might seem logical. However, since you are required to pay premiums until 2029, it’s advisable to continue with the policy. Redeeming after 2029 ensures you receive the maximum benefits. This approach also means you avoid any potential penalties or deductions that could apply if you redeem before the premium-paying term ends.

Impact of Early Redemption

If you consider redeeming the policy before the premium-paying term ends, there could be deductions or penalties. Early redemption might lead to a reduction in the final payout, and you could lose out on potential bonuses. Additionally, the policy's life cover will cease if you redeem early, which may not be advisable depending on your current insurance needs.

Assessing Your Current Financial Situation

Before deciding, assess your current financial situation. If you can comfortably continue paying the premiums until 2029, it is generally better to do so. This will allow you to maximize your benefits and avoid any unnecessary deductions. Also, consider your overall financial goals. If this policy fits into your long-term plan, continuing until the end of the premium-paying term is prudent.

Evaluating Alternative Investment Options

If you feel that this policy is not yielding the returns you desire, you may want to explore other investment options. However, surrendering the policy before the premium-paying term ends is usually not recommended due to potential financial losses. Consider alternative options only if you have thoroughly assessed the potential benefits versus the cost of early redemption.

Importance of Life Insurance Coverage

Jeevan Anand provides life coverage even after the policy matures. This is a crucial benefit to consider. If you redeem the policy early, you will lose this coverage. It’s important to ensure you have adequate life insurance coverage in place before making any decisions about early redemption.

Final Insights

Continuing with your LIC Jeevan Anand policy until the end of the premium-paying term in 2029 is advisable. This approach will maximize your benefits, including maturity value and life coverage. Redeeming the policy after 2029 ensures you receive the full sum assured, bonuses, and any loyalty additions without deductions. Assess your financial situation and insurance needs before making any decisions. Consider alternative investments only if they align better with your financial goals, but be mindful of potential losses from early redemption.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in