What should I do about my LIC policy?

Due to ignorance about different types of life insurance and tax saving schemes, I opted for jeevan anand policy (whole life policy) of LIC last year and paid premium of Rs 38k. The policy matures in 25 years. Later I learned a term insurance for me would have been a better option since that requires much less premium per year and if compared to the policy I have taken, I could easily invest the rest amount in other profitable channels, like mutual fund and PPF. Now I am planning to stop this policy (I am more upset because I clearly understand I was fooled by the agent) and buy a term insurance. Before that I would like to get suggestions from experienced people regarding this. Do you approve my plan? This is my first question.
My second question is, instead of surrendering the policy, the policy , as I heard, can be made paid-up, or in other words, I can get loan against the policy. However, I do not understand this process at all. Can anybody please explain me what this means and whether I should go for it.

4 Replies to “What should I do about my LIC policy?”

  1. Before investing anywhere you should first ask detail of various schemes you will definately find answer to your question instead of blame on agent you are paying 38k as premium it mean you are well educated. Now question regarding policy- Pension scheme is also better option. As regard to loan against policy is very much possible every process will be done by banker,what you do is to go to bank ask for loan against LIC policy again discuss in detail after all it’s your hard earned money.

  2. Hi Abhik,

    I think you are going in right direction. Even I am also trapped with Jeevan Anand and realized it much later than you. In any case i.e. after surrendering after 3 years, you won’t get 1st year premium.

    So better options would be to scrap the current policy, take term insurance and go for MF or PPF or FD.

    You can only take loan after paying 3 years premium and after that you would end up paying premium and interest both.



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  4. Jeevan Anand is a whole life policy which includes a term insurance.

    Any term insurance policy will cover your life upto max age 70 or 75 (depending on company) as reduced by term of policy. Jeevan Anand has a term insurance component which continues upto age 100. This portion continues after premium payment period.

    It makes sense to continue with Jeevan Anand.

    You may consider buying Term Insurance as an additional cover.

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