Life Insurance
I am 32 years old and my annual income is Rs3 lakh. I have four dependents. I have Life Insurance Corp. of India (LIC) Jeevan Anand policy of Rs5 lakh for which I pay Rs25,804 as premium annually. I am planning to surrender this policy and opt for term insurance. Which is the cheapest term policy and what will be the right sum assured for me?
—LAXMAN, EMAIL
Jeevan Anand policy of LIC is a combination of endowment assurance and whole-life plans. It provides financial protection against death throughout the lifetime of the policyholder. A lump sum is paid at the end of the selected term if the subscriber is still alive.
This policy may be surrendered after it has been in force for three years or more. The guaranteed surrender value is 30% of the basic premiums paid, excluding the first year’s premium.
Any extra premium(s) paid and premium(s) towards accident benefit are also excluded. If it is financially viable for you to pay future premiums, it is advisable to wait till the completion of the lock-in period so that the policy attains a surrender value and you don’t suffer total loss. Considering your age, income and dependants, you can take an additional life cover by taking a term policy separately.
A pure risk term plan, which does not give any cash value at the end of the term, would be the cheapest plan. You can take this plan from any life insurance company because the premiums are more or less the same. The right sum assured depends on numerous factors such as your total net assets, family’s fixed annual expenditure, the age of dependants and can be calculated only after considering these points.
I have invested Rs1.5 lakh in ICICI Prudential’s Lifetime Super Pension Plan over the last five years. What returns can I expect if I surrender the policy now?
—YOGI, EMAIL
ICICI Prudential’s Life Time Super Pension policy is a regular premium unit-linked pension policy. The returns of a unit-linked investment plan basically depend on the investment option chosen by you and its net asset value (NAV), which is based on the performance of the underlying funds. ICICI’s plan gives you the option to choose between six investment funds—Flexi-Growth, Maximiser, Flexi-Balanced, Balancer, Protector, and Preserver—based on your financial goals and risk profile. It also gives you the option to switch funds four times a year, at no cost.