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Should I Exit My 4-Year Jeevan Santhi Policy?

Milind

Milind Vadjikar  |751 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 05, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Oct 05, 2024Hindi
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I invested in single premium jeevan santhi policy of LIC. now it is in 4th year. I think it is not worth. Is it good to exit now?

Ans: The returns from traditional endowment life insurance policies are poised to drop further from already pathetic return that they use to provide due to guaranteed surrender value rules which have kicked in since 01/10/2024.

I am hoping that you have adequate term insurance cover for yourself and your spouse. If the answer is Yes then you may surrender it and invest in NPS, mutual funds.

Happy Investing!!

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

Moneywize   |174 Answers  |Ask -

Financial Planner - Answered on Jun 03, 2024

Asked by Anonymous - Jun 02, 2024Hindi
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I had taken SBI Life Insurance Policy Retire Smart LP for 10 lakh with @1 lakh premium paid every year. Policy was taken in March 2021, and it was given that I could close this policy after five years without penalty. I had paid 5 lakh as premium in this policy and the present fund value is about 5.70 lakh. Kindly advice about the decision I can take for this policy after completing five years. My Age is 64 now.
Ans: You're approaching your policy's maturity date in March 2026, and here are some options to consider for your SBI Life Retire Smart LP policy:

Understanding the Policy:

• Guaranteed Benefit: This policy guarantees 101% of your total paid premium on maturity. In your case, that's Rs 5,05,000 (1.01*Rs 5 lakh).
• Market Performance: The current fund value of Rs 5.70 lakh reflects how the units you invested in have performed in the market.

Decision Points at Maturity (March 2026):

• Surrender the Policy: You can receive the fund value (Rs 5.70 lakh) along with any guaranteed additions or terminal bonuses offered by SBI Life. However, check the policy documents for any surrender charges that might apply.
• Annuitise the Corpus: This option allows you to convert the total corpus (fund value + guaranteed additions) into a regular income stream through an annuity plan from SBI Life. This provides a guaranteed income but limits access to the principal amount.
• Continue the Policy (if allowed): Check with SBI Life if you have the option to extend the policy term. This allows the fund value to potentially grow further through market gains, but you'll continue paying premiums.

Choosing the Right Option:

Since I cannot give financial advice, here's how to make an informed decision:

• Review Policy Documents: Look for details on surrender charges, guaranteed additions, and the option to extend the policy.
• Contact SBI Life: Talk to your SBI Life advisor or customer care to understand the specific benefits and charges associated with each option.

Consider Your Needs:

• Retirement Income Needs: Do you need a guaranteed income stream (Annuity) or are you comfortable with some market risk for potentially higher returns (Continuing the Policy)?
• Other Retirement Savings: Do you have other sources of retirement income, like a pension or investments?
• Medical Needs: Factor in any potential medical expenses that might require a larger corpus.

Additional Tips:

• Market Performance: Consider the current market conditions. If the market is expected to perform well, continuing the policy might be beneficial.
• Risk Tolerance: How comfortable are you with market fluctuations? Annuities offer stability, while continuing the policy exposes you to market risks.

By carefully evaluating these factors and talking with SBI Life, you can make the best decision to secure your financial future in retirement.

..Read more

Ramalingam

Ramalingam Kalirajan  |7209 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 28, 2024

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I have a lic policy montly premium is 2220 for 10 yrs i have to pay. But policy will mature after 15 yrs i will get 5 lakhs should i continue or discontinued
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

..Read more

Latest Questions
Dr Anshuman

Dr Anshuman Manaswi  |6 Answers  |Ask -

Plastic-Aesthetic Surgeon, Emergency Care Consultant - Answered on Dec 05, 2024

Asked by Anonymous - Dec 05, 2024Hindi
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Dear Doctor, I work as a corporate lawyer in Delhi. I’ve been considering undergoing a cosmetic procedure for my skin for some time now, but I’m feeling a bit overwhelmed by the number of surgeons available. I want to ensure that I choose someone who is experienced, as this is a big decision for me. Could you advise what I should look for when selecting a plastic-aesthetic surgeon? Are there any specific red flags I should be aware of when researching potential surgeons? I want to make sure I’m in safe hands. I’m 40 years old.
Ans: This is a beautiful question.
Before I dwell on your question, there are a few points which are very important for the patient to know.
1. You should roughly know what result you wish to have.
2. Never think of a perfect result. There is no such result.
3. You must think in terms of improvement and if you are sble to achieve more than 90% approx, it can be considred good.
4. Dont compare your results with any celebrity's result. There body structure is different, they have probably taken better care till now and importantly, the result you see on a public platform is after make up and not the real result. Some times it may be a photoshopped image
5. Let your doctor know if you have any medical history and addictions.
6. Don't go with pre concieved notion (especially if you have researched a lot online). Discuss with the doctor, listen to his/ her views and raise your concerns if any
7. Try and see some results of the doctors work (Remember, too good a result may not be the true result). Realistic result is what you should want to look at and believe.
8. Don't fall for less budget! its obvious a meticulous job needs more surgical time. This means that the doctor may charge more. Seniority also adds to the cost.
What I mean, there is a price to be paid for a good job.(whether medical or anywhere).
Now coming to the Plastic surgeon's choice.
1. Research well, but dont fall prey to only advertisement. Small and big centers, both advertise,
2. Dont fall for glamour. You are going to a surgeon. A plastic surgeon's clinic is clean but not lavish generally. At least I believe that the person coming is not a client, but a patient. A patient - Doctor relationship is more pure than a client-Professional relationship.
3. Talk and discuss with the doctor. A too busy doctor may not always be the best doctor for you. Plastic surgery is about thinking, planning and execution. A doctor who thinks aloud about your problem ( especially if ut us face, nose, breast etc) is applying his/ her knowledge for your betterment, because every oerson is different.
4. Check the resilts? Look for genuinity.
5. Be wary of arrogant, loud and boisterous people. There is a difference between confidence and fambloyence.
6. Doctors who are attached to reputed hospitals are generally good in their work.
7. A doctor who can talk about probable complications is also a doctor worth trusting.
I hope I am able to do justice to this difficult question. All the best. You can write again if you need any other clarifications.
Dr. Anshuman Manaswi

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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