should i continue policy number 884365028 taken in 2012 running up to 2037

Ans: One can cancel the policy anytime within the policy period. However, cancelling the policy within 15 days from the date of receipt of policy documents results in a premium refund with almost negligible deduction.

If cancelled beyond the 15-day period, a different refund structure is applied by insurance companies depending on the period elapsed. The policy document has all details about the premium refund in case of voluntary cancellation.

All policyholders should read the 'Cancellation of the Policy' section of their policy or call your insurance company.  Alternatively, you may also e-mail them and get more information about the exact refund amount.

Ans: Assessing Your LIC Policy
You have a LIC policy where you pay Rs. 2,220 monthly for 10 years. The policy matures in 15 years, with an expected maturity amount of Rs. 5 lakhs. Let's explore if it is wise to continue or discontinue this policy, considering your financial goals.

Evaluating the Policy’s Return
To begin, let's examine the return you are likely to get:

Premium Paid: Over 10 years, you will pay Rs. 2,220 monthly, totaling Rs. 2,66,400.
Maturity Amount: You will receive Rs. 5 lakhs after 15 years.
At first glance, it seems like you are getting back more than you paid. However, when you account for inflation and other factors, the return is modest.

Considering the Inflation Impact
Inflation reduces the purchasing power of your money over time. The Rs. 5 lakhs you expect to receive after 15 years will not have the same value as it does today.

Key Points to Note:

Inflation can erode the real value of your maturity amount.
The return you get may not match your financial needs in 15 years.
Analyzing Alternative Investment Options
There are other investment avenues that might offer better returns with the same or even lower risk. These include mutual funds, especially actively managed ones, where a Certified Financial Planner can help you pick funds that align with your risk profile and goals.

Advantages of Actively Managed Funds:

Potential for higher returns compared to traditional insurance policies.
Professional management and regular adjustments to maximize gains.
Assessing the Disadvantages of Continuing with the Policy
By continuing with the policy, you might miss out on higher returns offered by alternative investments.

Points to Consider:

Traditional insurance policies often provide lower returns.
Opportunity cost of not investing in higher-return options like mutual funds.
Should You Discontinue the Policy?
If your primary goal is wealth creation, this policy might not be the best option. Discontinuing and reallocating your funds could be a better strategy.

What You Should Do:

Consult with a Certified Financial Planner: They can guide you on the best mutual funds to switch to.
Consider Surrendering the Policy: If it aligns with your financial goals, you could surrender the policy and reinvest the proceeds in a better-performing investment.
Assessing the Insurance Aspect
It’s important to consider that this policy may also provide life coverage. However, the coverage offered by such policies is often inadequate compared to term insurance plans.

Key Insights:

Term insurance offers higher coverage at a lower premium.
You could get better protection by opting for a term insurance plan and investing the remaining funds elsewhere.
Understanding the Cost of Surrendering the Policy
If you decide to discontinue the policy, you might incur some costs. It's important to weigh these costs against the benefits of reinvesting your funds.

Key Considerations:

Check the surrender value and any penalties involved.
Calculate the potential gains from alternative investments after accounting for these costs.
Exploring a Balanced Approach
If you're unsure whether to continue or discontinue, a balanced approach could involve maintaining the policy while diversifying your investments.

Points to Think About:

Continue with the policy for its insurance cover while also starting a mutual fund SIP.
Reassess your investment strategy periodically with the help of a Certified Financial Planner.
Final Insights
Continuing with your LIC policy might not be the best decision if wealth creation is your main goal. There are other investment avenues like mutual funds that offer potentially higher returns. You might consider surrendering the policy and reinvesting the funds into mutual funds while ensuring you have adequate life insurance coverage through a term plan.

Steps You Should Take:

Review your financial goals with a Certified Financial Planner.
Consider the benefits of alternative investments like mutual funds.
Ensure you have sufficient life coverage through term insurance.
This way, you can make informed decisions that align with your long-term financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

I feel no need to inform this to the insurer now since you acquired it after policy inception.

However you may update it to the insurance company sighting change in health status before next renewal.

Most likely renewal will get rejected or will be accepted without this condition.

Check on cardiac exclusive policies to cover your ailment.

Also keep an emergency fund aside as a safe provision in case any unforeseen situation arises.

Best wishes;

Ans: You are 29 and paying Rs?5,000 monthly for a life cover of Rs?10?lakh under a LIC Jeevan Anand endowment plan. Let us evaluate this from all angles, and see how it fits into your larger financial picture.

1. What an Endowment Policy Means for You
It combines insurance and investment in a single package.

Premium allocation is split: part for life cover, part for savings.

Returns are modest compared to pure investments.

Charges and commission reduce your effective yield.

Insight: You are paying Rs?5,000 a month purely to get Rs?10?lakh cover and a small maturity benefit after long years.

2. Ideal Use of Life Insurance
Life cover should ideally be pure term insurance.

Term plans offer high cover at low premium.

Investment benefits should come from mutual funds or other high-return assets.

Insight: Pure insurance is better handled separately from wealth creation.

3. What Jeevan?Anand Offers vs Alternatives
Jeevan?Anand Features

Provides life cover + maturity benefit

Lock-in creates discipline

Bonus may add some value at maturity

Drawbacks Compared to Alternatives

Low returns – typically 4–5% net over term

High charges reduce benefits

Poor liquidity – difficult to exit early

Better options: equity mutual funds, PPF, or hybrid funds

4. Comparing Returns and Cost
A Rs?5,000 premium for 15–20 years may give modest benefit

In contrast:

Actively managed equity or hybrid mutual funds often yield 10–12% average returns

PPF offers ~7–8% with compounding and better tax efficiency

Insight: You may be leaving higher wealth gains on the table by staying in endowment plan.

5. Liquidity and Flexibility Considerations
Insurance savings plans are illiquid, with surrender losses early.

Pure investments like mutual funds offer easy access.

If goal ingredients or needs change, mutual funds allow freedom.

Insight: Flexibility matters over your investment horizon.

6. Should You Continue or Surrender?
Evaluating Continuation

If you are okay with low returns and long-term lock-in, you may continue.

But these funds could perform poorly compared to other vehicles.

Evaluating Surrender

Early surrender may involve penalties and partial loss.

However, future premiums can shift to better investments.

You must compare surrender value vs future expected returns elsewhere.

Do this comparison with your CFP for clarity. You need to ask:

What is current surrender value?

What rate of return can the premium earn elsewhere?

Based on honest growth estimates, do you gain more by staying or surrendering?

7. Transitioning to Better Alternatives
If you choose to redirect your premiums, here’s an approach:

Use a term insurance plan for Rs?50–100?lakh cover.

Invest the difference (approx Rs?5,000) into:

Actively managed equity mutual funds – growth over 10+ years

Or PPF if risk is unwanted and you want compounding benefit

Use regular plan (not direct) via an MFD with CFP credential
– Ensures fund review, rebalancing, and guidance
– Avoids trial-and-error and emotional investing

8. Integrating into Your Overall Plan
Here is how your new financial setup could look:

Component Allocation Rationale
Term Insurance Cover Replace LIC’s cover High coverage, low premium
Equity Mutual Fund SIP Rs?5,000 monthly To replace endowment returns
PPF / Debt Funds (optional) Additional safety For tax-friendly stability

If you also have other investment goals, consider allocating more to broader SIPs actively managed.

9. Why Actively Managed Funds Over Index or Direct
Index funds passively follow markets, including weak stocks

Direct (no-advice) plans feel cheaper but lack guidance

Actively managed regular plans include:

Expert-led security selection

Ability to move in/out of sectors based on conditions

Periodic performance review

Support through life changes or investment rebalancing

You benefit from fund handling and review support, especially as goals and market cycles shift.

10. Tax Efficiency and Withdrawal
Equity funds taxed: LTCG above Rs?1.25 lakhs at 12.5%; STCG at 20%.

PPF is tax-free on maturity.

Use appropriate funds for horizons and tax plans.

CFP guidance helps with tax-efficient switching and withdrawals.

11. How This Helps Your Long-Term Goals
Shifting to pure investments can boost corpus over time

Increased returns compound powerfully over 10–15 years

Term insurance ensures your family is protected

You get flexibility without locking up funds

The overall plan fits into a future where savings and protection are clearly separated

12. Next Practical Steps
Check surrender value of existing LIC plan

Compare with projected returns from MF or PPF

If it's better to exit, get help from CFP to reinvest intelligently

Adjust your SIP portfolio over time for goal alignment

Keep reviewing every year with CFP support to stay on track

Final Insights
The LIC endowment policy provides low growth with high lock-in.

A better structure separates risk cover from wealth creation.

Aim for strong returns via actively managed investments with regular reviews.

Term insurance + SIPs in equity/PFFP offers stronger, flexible financial build-up.

Make decisions based on returns, liquidity needs, and future goals.

Your premium can be put to much better use through strategic investments.
Consult your CFP for surrender analysis and structured redirection.

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