What Are The Pros And Cons Of Asking Cash Back For Your LIC Policy?
LIC has become a very important part in the lives of most of the Indian people. Every family owns at least 2-3 LIC policies and they work hard every month to pay their high monthly premiums so that the financial security would be there at the time of some calamity. But from the present investment point of view, there are many points that may work against the LIC policies too. That’s why many people get confused about whether they should surrender their LIC policy or not. Things you should know before investing in LIC
Advantages of surrendering your LIC Policy
- The investor would be saved from paying thousand of rupees as monthly instalments that usually feel like financial burden. When you are not getting enough returns in lieu of frequent instalments, then all the efforts seems like waste. That’s especially true if you’re a young investor.
- LIC keeps on launching many new policies that offer even better advantages than the older LIC schemes. This may make you feel unsatisfied. So, surrendering the old policy for a new better one is profitable if you have paid instalments for only one or two years.
- The investor could use his monthly savings in those investment methods that promise higher returns in lesser time intervals. He could invest his savings in stock market, mutual funds etc. He would be able to diversify his investment portfolio.
Some Disadvantages that can’t be overlooked
- When a person surrenders his LIC Policy after the duration of 1-2 years, then he has to suffer some investment losses. That’s because of the LIC Return Policy that clearly states that only about 30% of the total investment amount of the investor would be returned. The rest of the money would be forfeited.
- Also, the tax benefits that the investor got because of that LIC Policy would also get nullified. So, you would have to pay greater amount of taxes on your monthly income.
If you want to discontinue your LIC please read this article to understand the options available.