Ask Money Today: Should I sell LIC Jeevan Anand to buy a term insurance plan?

I had bought LIC Jeevan Anand policy in 2016 for a premium of Rs 22,000. I was not aware of term insurance back then and I realised my mistake now. Should I continue with the Jeevan Anand policy or get rid of it to buy a term insurance policy? Please suggest what are my options? If I do surrender the policy, how much would I receive back?

- Anirudh Kumar

By Shailesh Kumar, Insurance Expert & Co Founder, Insurance Samadhan

At the outset, buying an insurance is never a mistake. It is a certificate that you are responsible and love your family. I'll answer the question in three parts:

1) Jeevan Anand has been a popular plan of LIC as it offers sum assured plus bonus at the end of payment term and offers whole life cover even if you stop paying premium. At tax-free return of approx 4 per cent, Jeevan Anand has been a good option for all. As you have already paid five premiums, you should continue with the policy. An illustration for 20 payment of premiums:

Pay Rs 22,000 for 20 years = Rs 4.40 lakh

Receive after 20 years =

Approx Rs 8 lakh

Money on death = Rs 4 lakh

Total received = Rs 12 lakh

2) Term insurance is for pure risk cover that is money to family on death . It supplements all other insurances which we have taken. I recommend combination of a term plan and Jeevan Anand.

3) If you decide to discontinue Jeevan Anand then you can surrender the policy. You will receive approx 50 per cent of your paid premium.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)

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