I myself and my wife both at 32 years old and NRI. Around 7 year back when we got married we started investing, we decided that one person(myself) will invest in mutual funds to build up the corpus for retirement and other a bit more secure avenue. So she went with LIC agent’s magic plan (retire and enjoy) which is basically 4 endowment policies of LIC table number 14 plan. She is investing around 90K a year till the age of 55 to get insurance as well as returns after that. Obviously due to lack of information we didn’t think about it too much but just wanted to get your view if we should continue in this. I have seen good reviews of the table 14 plan as well as LIC is a trusted name with the history of giving good bonuses but at an overall level how does it stacks up?
Vini-It good that you planned for retirement and also it is good that you decided to diversify your investment. But sad part is you forgot to decide how much portion must go towards each asset class (equity or debt like LIC). It wrong to go with an idea like one person fully invest in equity and another in secure avenue. Instead you both must combine the investable amount for each goal then chose the products.
LIC is trusted but at what cost? Look at the returns of all such endowment plans. They provide you the return of around 5% to 6%. Whether this good to sustain? Think of inflation and this policy return. Actually you are into negative REAL RETURN. When you say bonus then let us say they declared you Rs.50 as a bonus for you. Later on this Rs.50 will not get a single penny as return of investment. Simple to say, they will not add a single paisa to this bonus. They simply keep this bonus amount with them and pay you back at the time of death or maturity. So in which way you can say that TRUST or GOOD BONUS will match your goal? I am not degrading you close the plans. But if you are satisfied with kind of return you get from these plans, then continue. But seriously, I feel these are worst products for long term goals.
Regarding Retire and Enjoy, I already written a post on this with much to the anger of few LIC agents 🙂 Please go through it.
Thanks Basu – as I said we have already invested around Rs 3.6 lakhs in last 6 years. I would check with the LIC office when I am in India on what happens if we surrender it now and even if I am able to get half of the money back I think it would be a wise decision to close this now instead of paying for another 20 years. Hope you agree with this approach.
Vini-Go ahead 🙂