I have taken LIC Money Back Insurance policy in February, 2006. In this policy, I have 2 lacs insurance and I get the money back in every five years of Rs. 20,000. I got Rs.20,000 in February, 2011 and I will get another Rs.20,000 in 2016. Should I cancel this LIC policy or carry on? I have taken this policy for 20 years
Sachetna-First understand why you need this policy. As an ideal insurance requirement, the life insurance cover must be at least around 15-20 times of your yearly income. Also, when you are investing for a long term then ideal expectation one must have is to beat the inflation i.e around 10%. When we consider both these aspects, then definitely this plan neither fulfills your insurance need nor the return on investment (we can expect a return of around 5% to 6%).
Hence, typical suggestion is to come out at the earliest and buy term insurance. At the same time, start investing based on financial goals. Check the surrender value and try to come out of it at the earliest.