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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by PANKAJ on Jul 22, 2025Hindi

I am 27 years old i buy LIC's New Jeevan Labh Plan Plan -936 With Commencement date:28/07/2022 With Instalment Premium: 45,027.00 Per Year and I have LIC's Jeevan Umang Plan (945) With Commencement Date:-28/07/2022 With Instalment Premium: 66386.00 Per Year . My monthly income is eighty thousand Than What should I do With LIC Policy can I Surrender it or Something else

Ans: You are 27 years old. Your income is Rs. 80,000 per month. You are paying Rs. 45,027 annually for LIC’s New Jeevan Labh (Plan 936). You are also paying Rs. 66,386 annually for LIC’s Jeevan Umang (Plan 945). Both started on 28/07/2022. Combined, you are paying Rs. 1,11,413 per year. That is around Rs. 9,284 per month.

Let’s assess this from all angles.

? Your Age and Financial Advantage

– You are just 27 years old now.
– You have long working life ahead.
– This is the best time to build wealth.
– Time is your biggest asset right now.
– Small changes now will give big results later.
– Your current income is good.
– Rs. 80,000 per month gives you high saving potential.
– You are on the right track to start financial planning early.

? What LIC Policies Really Do

– Jeevan Labh and Jeevan Umang are traditional LIC policies.
– These are investment plus insurance plans.
– They offer low life cover.
– They offer very low returns.
– Returns are around 4% to 5% only.
– This is even lower than inflation.
– So your money loses value over time.
– You pay regular premium but get poor growth.
– These plans are not good for wealth creation.

? Problems With Investment-Cum-Insurance Plans

– These plans mix two different goals.
– One is protection, other is wealth building.
– But neither goal is fully achieved.
– Insurance cover is too low for your need.
– Investment return is too small for your future.
– Your money gets locked for long term.
– There is very low liquidity in such plans.
– You can’t withdraw when you need.
– If you miss premium, policy may lapse.
– It becomes a burden without good benefit.

? Better Way to Do Insurance

– Insurance is only for protection.
– For that, buy a pure term insurance plan.
– It is cheaper and gives high life cover.
– Premium will be very low at your age.
– You can get Rs. 1 crore cover at low cost.
– That will protect your family fully.
– Don’t use LIC traditional plans for insurance needs.

? Better Way to Do Investment

– Investment is for growth of money.
– Use mutual funds for this purpose.
– Start SIPs in actively managed mutual funds.
– These funds grow with market and give better returns.
– Index funds are not good for you.
– Index funds only copy the market blindly.
– They fall badly when market crashes.
– They don’t protect your money in tough times.
– Actively managed funds adjust risk and return.
– They are better for a long-term investor like you.

? Disadvantages of Continuing LIC Plans

– You will pay high premiums every year.
– Your returns will stay very low.
– You will not be able to stop in middle.
– You lose flexibility with your money.
– In future, you may need that money.
– But these plans lock it for 15–20 years.
– If you surrender later, you get less than what you paid.
– So, more delay will lead to more loss.

? Can You Surrender Now?

– Yes, you can surrender the plans now.
– But you have completed only 2 years.
– So surrender value will be low now.
– Still, it is better to stop early than regret later.
– You can consider paid-up option also.
– But that also gives poor return.
– The best step is to stop both policies.
– Take the loss now and secure your future better.
– Redeploy that money into mutual funds.

? What You Should Do Now

– First, buy a term insurance plan.
– This gives full life protection at low cost.
– Second, stop both LIC policies immediately.
– Don’t renew premium this July 2025.
– Third, start SIPs of Rs. 9,000 monthly in mutual funds.
– Choose 2 or 3 actively managed mutual funds.
– Use different types like large-cap, flexi-cap, hybrid.
– Start with regular plans through a Certified Financial Planner.
– Don’t go with direct mutual fund apps.

? Why Regular Funds Through CFP Are Better

– Direct funds offer no support.
– No one tells you when to change funds.
– During market fall, you may panic and stop SIPs.
– That harms your goals and confidence.
– Regular funds with CFP and MFD guidance give direction.
– CFP gives full financial planning service.
– They help in goal setting, rebalancing and exit strategy.
– Regular mode is more suitable for working individuals.
– Focus on value, not just cost.

? What Happens If You Delay Action

– You will continue paying Rs. 1.1 lakh yearly.
– For 20 years, this is over Rs. 22 lakh.
– You may get Rs. 30–32 lakh after 25 years.
– But value of money will reduce due to inflation.
– You are locking your potential wealth for poor gain.
– If you act now, your money will grow better.
– Mutual funds can build Rs. 1 crore in 25 years.
– But traditional LIC plans can’t reach there.

? Tax Benefit is Not Enough Reason

– LIC policies offer 80C benefit.
– But that’s not enough to keep bad investment.
– ELSS mutual fund also gives same benefit.
– And gives higher returns than LIC plans.
– Tax-saving should not be your main reason to invest.
– Return, liquidity and flexibility are more important.

? Protecting Your Financial Future

– You are young and earning well.
– This is the best time to invest right.
– Avoid emotional attachment to LIC policies.
– Take informed decision with full calculation.
– Focus on long-term wealth creation.
– Your financial freedom depends on your decisions today.
– Choose flexible, high-growth investment options.
– Stay protected with proper term insurance.

? Role of a Certified Financial Planner

– A CFP helps build your financial foundation.
– They create a plan based on your life goals.
– They track your progress and help in rebalancing.
– They also help in choosing right SIPs and insurance.
– A CFP ensures you don’t make random decisions.
– Instead of following crowd, you follow a structured path.
– Your money works better with CFP guidance.

? Finally

– You are still early in your working life.
– But LIC policies are not suitable for you.
– They give low return, low cover, and low flexibility.
– You should stop both plans now.
– Buy a good term insurance policy.
– Start mutual fund SIPs in regular plan through CFP.
– Plan your future with full awareness and proper support.
– Take this small step today.
– It will give you peace and growth for many years ahead.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.