LIC policy maturing soon - How much will my son receive?

Ans: Here you have not mentioned the type of policy (ULIP / Traditional) for us to give a detailed analysis.

For life insurance plans issued after April 1, 2012, the exemption from tax on single premium life insurance is valid only when the premium is less than 10% of the total sum assured.

Now, if the policy is taken before April 2012, you could avail the exemptions under Section 10D if the premiums paid in a single year during the policy term are not more than 20% of the sum assured. You will need to show the entire maturity proceeds in your return if taxable.

The entire premium of a life insurance plan is eligible for a tax deduction as per Section 80C up to a maximum limit of Rs 1.5 lakh. 

Ans: And this policy was for what period. Best is you can put this query to your insurance agent or get it from your policy servicing branch

Ans: Assessing Your LIC Jeevan Anand Policy
Understanding Maturity Amount
Your LIC Jeevan Anand policy is nearing the end of its 21-year term. Given a policy sum assured of ?14 lakhs and an annual premium of ?71,000, the maturity amount will include the sum assured along with any applicable bonuses. However, without specific bonus rates, an exact figure is challenging to determine. Generally, LIC policies like Jeevan Anand accrue bonuses over the years, which can significantly enhance the maturity amount.

Life Coverage Post Maturity
One key feature of the LIC Jeevan Anand policy is the continuation of life cover even after the maturity amount is paid out. This means you will still have a life cover equal to the sum assured (?14 lakhs) after the policy matures, providing continued financial security for your beneficiaries.

Investment Recommendations for Maturity Amount
Risk Assessment and Goals
Before deciding where to invest the maturity amount, consider your risk tolerance, financial goals, and investment horizon. Since the maturity amount is likely to be substantial, diversifying across various investment options is prudent.

Investment Options
1. Mutual Funds
Equity Mutual Funds: If you have a high-risk tolerance and a long-term investment horizon, consider equity mutual funds. They offer high growth potential but come with higher volatility.

Balanced or Hybrid Funds: For a moderate risk appetite, balanced funds invest in a mix of equities and debt, providing a balance of growth and stability.

Debt Mutual Funds: If you prefer low risk, debt funds are safer and provide regular income, suitable for short to medium-term goals.

2. Systematic Investment Plan (SIP)
Consider investing a portion of the maturity amount in mutual funds through SIPs. This helps in averaging the purchase cost and reduces the impact of market volatility.

3. Public Provident Fund (PPF)
For long-term, risk-free investments, PPF is a good option. It offers attractive tax-free returns and has a lock-in period of 15 years, making it suitable for retirement planning.

4. National Pension System (NPS)
NPS is another long-term investment option, especially beneficial for retirement planning. It offers a mix of equity, corporate bonds, and government securities with tax benefits.

5. Fixed Deposits (FD)
If you seek safety and assured returns, consider investing a portion in fixed deposits. Although returns are lower compared to equity, FDs provide guaranteed income.

6. Gold
Investing in gold through Gold ETFs or Sovereign Gold Bonds can provide a hedge against inflation and add stability to your portfolio.

Diversified Portfolio Approach
High-Risk Investments: Allocate around 40-50% in equity mutual funds or direct stocks for high growth potential.

Moderate-Risk Investments: Allocate 20-30% in balanced funds or hybrid funds for balanced growth and stability.

Low-Risk Investments: Allocate 20-30% in debt funds, PPF, or FDs for assured returns and safety.

Alternative Investments: Allocate a small portion, around 5-10%, in gold or other alternative assets for diversification.

Conclusion
Upon maturity of your LIC Jeevan Anand policy, you will receive a significant lump sum. Continue benefiting from life coverage even after maturity. To optimize this maturity amount, diversify your investments across equity, debt, and alternative options based on your risk profile and financial goals. Regularly review and adjust your portfolio to stay aligned with your objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Assessing Your Child LIC Policy
Policy Overview
Your Child LIC Policy commenced in 2001. You are paying Rs 11,473 annually. The tenure of the policy is 17 years. It matures in the year 2026.

Understanding the Policy
All LIC policies come with a sum assured and additional bonuses. These bonuses get added over the period of the policy. This maturity amount includes the sum assured, along with the bonuses.

Calculation Components
Sum Assured: This is the amount guaranteed. It is mentioned in your policy
Bonus: LIC announces bonuses on an annual basis. These are based on the type of policy and the performance of the LIC.
maturity amount Calculation
The maturity amount is calculated as the total of the following:
Sum Assured
Added Bonuses
Illustration Letthe sum assured be Rs 2,00,000 Bonuses also accrue annually. We'll be assuming the average bonus rate to be Rs 40 for every Rs 1,000 of sum assured. This rate might vary from year to year, but to calculate, we are assuming an average rate.

Annualised Bonus: Rs 2,00,000 / 1,000 * Rs 40 = Rs 8,000
Total Bonus for 25 Years: Rs 8,000 * 25 = Rs 2,00,000
So the maturity amount could be around:

Sum Assured: Rs 2,00,000
Bonuses: Rs 2,00,000
Total Maturity Amount: Rs 4,00,000
Factors that Determine Maturity Amount
The exact amount on maturity could be determined by a number of factors:

Bonus Rates: These vary each year and are dependent on the performance of LIC.
Type of Policy: There are various types of policies.
Other Advantages There are plans providing greater benefits, such as loyalty additions. Stepsto be Followed Read Policy Document: Read the policy document for details of sum assured and bonus. Contact LIC: Contact LIC for precise calculation. They will be able to provide you with the current bonus rates. Speakto a Certified Financial Planner He can inform you with a better understanding of the working of the policy and also guide you with options to re-invest the amount post its maturity. Evaluating All Investment Options
It is time to rethink your investment strategy. Here are some points for your consideration:

Reinvestment: When it matures consider reinvesting in mutual funds. They normally give better returns than the usual insurance policies.

Active Management: Actively managed funds may do better than index funds. They have professional fund managers who strive to beat the market.

Regular Funds: A Mutual Fund Distributor coupled with a Certified Financial Planner can offer better fund selection and professional advice. Final Words
Your Child LIC Policy is due for maturity soon. Knowing the maturity amount will help in planning further investments. Re-evaluate your investment options. Professional guidance in seeking the best returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in