Hello All,
I recently started taking charge of my family's investments and I came across some LIC insurance schemes which have been bought as "investments" about 6 years ago. It seems that a family friend had coaxed us into getting these but now that I try to understand them a bit deeper, they seem like useless policies. The only good thing I see I that they help in saving tax under 80C.
Below are all the policies
Can you please help as to what can be done now? Is there a point in continuing these?
Although .. am not Insurance expert... you should meet some one you trust or talk to seniors and decide your direction.
IMO... all these insurance are really dumb idea!
you are going to pay premium for next 20-25 years locking up your premium money which would run into several lacs if you adjust for inflation.
well, after you are dead, if you think your family badly needs insurance support and can't stand on their own... these policies make sense. But usually this is NOT the case.
Instead of such long term insurance, short term medical insurances could be lot better choice to cover big medical expenses...
If you know a better way to invest your money... you should get all your money out of
these stupid insurance scheme... and those investments can actually cover lot better
than insurance!
But here is the huge down side of exiting insurance prematurely.
LIC is going to lock down a significant portion of premium and you will NOT get it back...
This used up premium is going to run to 0.75 -1.2 lacs I guess... you should leave that
money on the table for LIC and get your rest of the money and escape this stupid idea!
If you adjust for inflation, the insurance coverage after 20 years will buy you
3 full meals for 6 months in a rented apartment...its not that much big money after 20 years at all! Think do you need to lock down your money... or use it for investing
and let the returns from investing cover your risks...?
The decision is up to you... I had the same option... I took the path of...
leaving significant amt money on table to LIC and said 'F*** u' insurance agents...
and trying my best to learn investing... well that's crazy me...
For me... the choice seem to be: (a)leave significant amount to LIC and exit VS (b) leave even MORE ever bigger amt to LIC and lock your money for another 25 years
which you could use for business that can compound...
I chose option (a)
you have to think for yourself!
If you feel you are always going to be in fixed wage earner group... then insurance is better..
If you feel you are going to be part of a business group or investor group... exiting the useless money lock downs and channeling it to compounding investments make sense!
Don't fall... for following traps:
* "it gives tax benefit sir"
* "you can get a loan on it for cheap sir"
* "it's going to cover your family sir"
* "it can pay your medical emergency sir"
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Think counter points:
* is the tax benefit worth locking down several lacs for 25 years! by the time your son/daughter may be earning 10 times your current salary... just by inflation!
* do you really want to get into home loans in such a early age and give up all other investing/business ventures for fixed income trap?
* does your family really need that insurance money after you die!? does it make any sense?
* really, does the petty amount they pay on medical emergency worth the time value of your money being locked?
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extra bonus question:
* 90% of all insurance schemes are over priced by design, are these insurance guys serving my *actual* need or using me as food to fatten their wallet ?
