I had taken a PM Vaya Bandana LIC scheme at 6 Lacs in the year 2020 . Now the LIC has informed me that I had exceeded Rs 15 lacs cap on this scheme. Neither me nor my Agent or LIC noticed that at the time of investment. Now LIC wants me to return the Certificate and return my money after deducting the premium paid. This means I shall loose : 1. Any return on my investment for last 3 years. 2. LIC had taken Rs 52000.00 as GST. What is the remedy and why I shall be penalized for the fault which all had committed.

Ans: Your issue is arising out of how the particular provision is worded.  As per the provision, tax is payable on long-term capital gains “exceeding one lakh rupees” at the rate of ten per cent. 

Ans: First, I want to acknowledge your situation and empathize with the financial stress you're experiencing. Losing a job and dealing with an unexpected financial burden is challenging. However, there are steps you can take to manage your current predicament and make informed decisions moving forward.

Evaluating Your Policy
You mentioned that you purchased an Edelweiss LIC policy with an annual premium of Rs 5,25,000. Unfortunately, you have lost your job and cannot pay the second premium. You've also requested a refund, but the company has refused.

In India, insurance policies, including LIC, typically have strict terms regarding premium payments and refunds. Generally, if the policy lapses due to non-payment of premiums, the insurer may not refund the premium paid.

Surrendering the Policy
If you cannot continue with the policy, surrendering it might be an option. Surrendering a policy before the stipulated period usually results in a significant loss, as the surrender value is often much lower than the total premiums paid. However, it might be better than letting the policy lapse without any value.

Check with your insurer about the surrender value and the exact procedure for surrendering the policy. Ensure you understand the financial implications, including any penalties or fees.

Exploring Policy Loan Options
Some insurance policies offer the option to take a loan against the policy's surrender value. This might be a viable short-term solution to meet your financial needs without completely losing the benefits of the policy.

Enquire with Edelweiss LIC if a policy loan is available and assess the terms, including interest rates and repayment conditions. This can provide immediate financial relief while keeping the policy in force.

Considering the Free Look Period
When you buy an insurance policy, there is a "free look period," usually 15 days from the date of receipt of the policy During this period, you can review the policy terms and conditions. If you find them unsatisfactory, you can return the policy and get a refund of the premium paid, minus some nominal charges.

If you are still within this period, you can leverage this option. However, it seems you might have already passed this window. For future reference, always utilise this period to ensure the policy suits your needs.

Budgeting and Financial Planning
To navigate through your current financial crunch, creating a detailed budget is crucial. List all your income sources, savings, and expenses. Identify areas where you can cut costs or defer payments.

This budget will give you a clear picture of your financial status and help you prioritize your expenses. Focus on essential needs and avoid any unnecessary expenditures.

Seeking Alternative Income Sources
Since you've lost your job, exploring alternative income sources is essential. Consider part-time or freelance work, which can provide interim financial support. Online platforms and local opportunities might offer suitable options based on your skills and experience.

Networking with former colleagues, friends, and industry contacts can also open up new job opportunities. Inform them about your current situation and actively seek their assistance in finding suitable job openings.

Debt Management
If you have existing debts, managing them efficiently is vital. Contact your lenders and explain your situation. Some lenders might offer deferment or restructuring options for your loans.

Prioritize high-interest debts and aim to pay them off first. Consider consolidating your debts if it reduces your overall interest burden and simplifies repayments.

Emergency Fund
If you have an emergency fund, this is the time to utilize it. An emergency fund is designed for unforeseen circumstances like job loss. Ideally, it should cover 3 to 6 months of living expenses.

If you don’t have one, consider starting to build one as soon as you stabilize your finances. Having an emergency fund provides a financial cushion for future unexpected situations.

Financial Assistance and Support
Explore government schemes and financial assistance programs that might be available for unemployed individuals. Some organizations and non-profits offer financial aid or support for those in need.

Seek advice from a certified financial planner who can provide tailored guidance based on your specific situation. They can help you create a recovery plan and suggest investment strategies for future stability.

Exploring Other Investment Options
While dealing with your current policy and financial issues, it's also a good time to evaluate other investment options. Investing in mutual funds through SIPs (Systematic Investment Plans) can provide better returns and flexibility compared to traditional insurance policies.

SIPs allow you to invest a fixed amount regularly, even with a limited budget. They offer the benefit of rupee cost averaging and potential for higher returns over the long term.

Benefits of Actively Managed Funds
Instead of investing in index funds, consider actively managed funds. These funds are managed by professional fund managers who aim to outperform the market.

Actively managed funds can adapt to changing market conditions and potentially offer better returns. The expertise of fund managers and their ability to select high-performing stocks can provide a competitive edge.

Advantages of Regular Funds
While direct funds have lower expense ratios, regular funds offer the benefit of professional guidance from certified financial planners. Investing through a planner ensures you receive personalized advice and continuous portfolio monitoring.

Regular funds also provide access to additional services and support, helping you make informed investment decisions. This professional guidance can be invaluable, especially in complex financial situations.

Final Insights
Your current financial challenges require careful planning and informed decisions. By evaluating your insurance policy options, budgeting effectively, exploring alternative income sources, and seeking professional guidance, you can navigate this difficult period.

Investing in mutual funds through SIPs and opting for actively managed funds can provide better financial growth. Remember, seeking advice from a certified financial planner ensures you receive tailored and professional support.

Take proactive steps to manage your finances, and with time, you can overcome these challenges and achieve financial stability.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Hello;

You can apply for duplicate policy certificates from LIC by the process laid down for the same.

It is quite cumbersome so better would be if you can search and find policy certificates at your home or agent office.

The agent seems to have provided you with incorrect information.

You are entitled to receive sum assured under the life insurance policies taken for your late father.

Best wishes;

Ans: You have clearly outlined your concern. Evaluating whether to surrender your LIC Jeevan Anand Plan 815 is a valid question, especially in a debt crisis. Let's assess this from a 360-degree financial planning perspective.

Policy Summary and Present Status
Policy Name: LIC Jeevan Anand (Plan 815)

Sum Assured: Rs. 8 lakhs

Annual Premium: Rs. 36,000

Policy Start Year: 2015

Maturity Year: 2040

Premiums Paid: 10 years completed

Premiums Remaining: 15 more years to go

You have paid Rs. 3.6 lakhs till date (Rs. 36,000 × 10 years)

Surrender Value Possibility at This Stage
After 10 years, policy acquires good surrender value.

You are eligible for a Guaranteed Surrender Value plus bonus value.

Usually, you can get 30% to 50% of total premiums paid.

That means, you may receive around Rs. 1.2 lakhs to Rs. 1.8 lakhs.

Bonus accumulated may add another Rs. 20,000 to Rs. 50,000

So, expected surrender value = Rs. 1.5 lakhs to Rs. 2.3 lakhs.

You must confirm exact amount from the LIC branch or online portal.

LIC agents may not give accurate surrender value details. Go to branch directly.

Is Surrendering Beneficial During Debt Pressure?
You are currently under heavy debt of Rs. 30 lakhs.

Every rupee counts in managing your debt pressure.

Rs. 2 lakhs recovery from this LIC policy can ease your situation slightly.

Also, you will stop paying Rs. 36,000 annually going forward.

That means extra Rs. 3,000 every month saved.

This saving can be used to clear smaller EMIs.

Stopping premium outflow will ease your monthly budget.

Also, LIC policies give very low returns – around 4% to 5% per year.

That’s not good enough when your loans are charging 18% or more interest.

Holding this policy makes no sense when you are paying 2x or 3x in interest.

Insurance and Investment Are Different
LIC Jeevan Anand is an investment cum insurance plan.

Such plans offer low insurance cover and low returns.

You must separate insurance and investment always.

Buy term insurance only for pure life cover.

Invest separately in instruments with better returns.

Do not mix the two goals. It creates confusion and underperformance.

Once Debts Are Cleared – Start Fresh Investment
When your loan burden is reduced, start SIPs in mutual funds.

But don’t choose direct funds on your own. They look cheaper but are risky.

Direct plans don’t guide you when market falls.

Regular plans via MFD with CFP support are more reliable.

Professional help matters more than 0.5% savings in cost.

Actively managed funds give consistent performance over time.

Index funds don’t adapt to market changes. They lack flexibility.

Actively managed funds are better in Indian markets due to volatility.

Invest in regular mutual funds through a Certified Financial Planner.

What If You Don’t Surrender the Policy?
You’ll continue paying Rs. 36,000 every year for 15 more years.

Total outflow will be Rs. 5.4 lakhs more in future.

On maturity in 2040, expected return will be around Rs. 12 to 14 lakhs.

That gives you less than 5% return yearly.

Against that, your credit cards or personal loans are eating 18% to 36%.

You are borrowing at 36% and investing at 5%. It is a huge mismatch.

It is not wise to keep such a policy when under high debt pressure.

Also, keeping it does not help in your credit score recovery.

It only blocks your cash flow for the next 15 years.

If You Are Emotionally Attached to the Policy
Some people feel emotional about LIC policies.

They may feel security or trust due to LIC brand.

But emotional decisions don’t work well in money matters.

Make decision based on logic, not emotions.

You can always restart investment later with better options.

But your debt needs urgent solution today.

Steps to Surrender the Policy
Visit the LIC branch where the policy was issued.

Carry original bond, ID proof, cancelled cheque, and surrender request form.

Request surrender value statement. Ask for exact amount.

Submit the request in writing and get acknowledgement.

You will get amount by NEFT in 7–10 working days.

Once received, use it immediately to reduce your highest-interest loan.

What to Do with the Surrender Proceeds
Don’t spend the amount. Use it only for loan repayment.

Target the most painful loan first – credit card or loan app.

Next, use the freed-up monthly Rs. 3,000 for loan EMIs.

Recalculate your EMI burden after that.

This will reduce your stress and improve CIBIL score.

Don’t reinvest this money now.

Focus only on debt elimination till your income becomes stable.

Final Insights
Your decision to question this policy is smart.

Most people don’t review old policies. You have taken a right step.

Surrendering this LIC policy now is a wise choice.

It gives cash today and saves money in future.

It helps you reduce debt faster and gain control over money.

Once your situation improves, you can start better investments.

Don’t feel guilty for surrendering. It is a practical step, not failure.

Financial planning is about making right choices at right time.

And this is the right time for that decision.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment