Jeevan Saral Policyholder Needs Help with Surrender and Maturity Values

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: Surrendering an insurance policy is a major decision. You have consistently paid Rs 4083/- per month since 2012. This dedication shows your commitment to securing your future. Now, let's delve into the specifics of surrendering your policy and its implications.

Surrender Value and Its Components
The surrender value is the amount you get when you decide to discontinue your policy before its maturity. This amount includes two main components:

Guaranteed Surrender Value: This is a percentage of the premiums you have paid, minus the first year's premium and any bonuses you might have received.

Special Surrender Value: This is usually higher than the guaranteed surrender value. It takes into account factors like the duration of the policy and the total premiums paid.

Since you have been paying premiums for over a decade, you are likely to receive a special surrender value. This value reflects the time and money invested in the policy.

Evaluating Bonuses
Insurance policies often come with bonuses, which are additional amounts added to the sum assured. These bonuses can significantly impact the surrender value. However, understanding the exact bonus details can be challenging without specific policy documentation. Generally, bonuses accumulate annually and are declared by the insurance company based on their profits.

In your case, given the policy's tenure, there should be a notable bonus component. But, for precise information, it's essential to contact the insurance company directly or refer to your policy documents.

Analyzing Financial Goals
Surrendering a policy is not just about the immediate financial gain. It's crucial to align this decision with your long-term financial goals. Reflect on the reasons for surrendering the policy:

Immediate Financial Needs: If you have urgent financial requirements, surrendering the policy might provide quick funds.

Better Investment Opportunities: You might want to explore other investment avenues that offer higher returns.

Changing Financial Priorities: Your financial goals and priorities might have evolved over time.

Exploring Alternative Investments
Upon surrendering your policy, you might consider reinvesting the proceeds. Here are some options to consider:

Mutual Funds
Mutual funds offer a diverse range of investment opportunities. They are managed by professional fund managers who make investment decisions on your behalf. Here’s why mutual funds can be a good option:

Diversification: Mutual funds invest in a variety of assets, reducing risk.

Professional Management: Experienced fund managers handle your investments.

Liquidity: You can easily buy and sell mutual fund units, providing flexibility.

Potential for Higher Returns: Historically, mutual funds have offered higher returns compared to traditional savings instruments.

Systematic Investment Plans (SIPs)
SIPs are a disciplined way to invest in mutual funds. They allow you to invest a fixed amount regularly, ensuring you benefit from market fluctuations. This method can help you build a substantial corpus over time.

Debt Instruments
If you prefer lower risk, consider debt instruments like fixed deposits or government bonds. These options provide stability and predictable returns.

Equity Investments
For those comfortable with higher risk, equity investments can offer significant growth potential. Investing in stocks directly can be rewarding but requires careful analysis and monitoring.

Assessing Risks and Benefits
Every investment comes with its own set of risks and benefits. It’s important to evaluate these before making a decision:

Risk Tolerance: Understand your ability to withstand market fluctuations.

Time Horizon: Consider the duration you can keep your money invested.

Financial Goals: Align your investments with your long-term objectives.

Tax Implications: Different investments have varied tax treatments. Understand the tax benefits and liabilities associated with each option.

Consulting a Certified Financial Planner
To make an informed decision, it’s wise to consult a Certified Financial Planner (CFP). A CFP can provide personalized advice based on your financial situation and goals. They can help you:

Analyze Your Current Financial Position: Assess your income, expenses, and savings.

Set Realistic Goals: Define achievable financial objectives.

Create a Customized Investment Plan: Develop a strategy tailored to your needs.

Monitor and Adjust: Regularly review and adjust your plan to stay on track.


Your dedication to paying premiums for over a decade is commendable. This long-term commitment reflects your focus on financial security. When considering policy surrender, it's important to maintain this long-term perspective. Think about how your decisions today will impact your financial future.


We understand that navigating financial decisions can be challenging. It’s normal to feel uncertain about the best course of action. By gathering information and seeking professional advice, you’re taking the right steps toward making an informed decision.

Final Insights
Surrendering your insurance policy is a significant decision with various implications. It's essential to consider the surrender value, bonuses, and your long-term financial goals. Exploring alternative investments can provide opportunities for better returns and financial growth. Consulting a Certified Financial Planner can offer valuable guidance tailored to your needs. Remember to maintain a long-term perspective and make decisions that align with your financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: If you urgently need cash and the Tata AIA Fortune Pro policy has completed its lock-in period, you may consider surrendering it. However, since the policy term is until 2033 and mid-cap funds can potentially offer good long-term returns, weigh the opportunity cost. To get the surrender value, you should contact Tata AIA directly or visit a nearby branch.

If you decide to surrender, you could allocate a portion to higher-return investments like equity mutual funds while keeping some in liquid or short-term debt funds for immediate needs.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
Instagram: https://www.instagram.com/holistic_investment_planners/

Ans: Some insurance companies even charge penalty similar to what is levied during policy surrender, for paid up policies.

Suggest you check that aspect with LIC.

If they are charging then it is better to surrender and exit.

If they are not charging then you may retain them as paid up policies and divert the policy premium amount to investment in mutual funds.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing