Facebook TwitterLinkedInYoutubewhatsapp Start Planning for your Financial goals
Schedule Your Free Consultation
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Holistic investment planners, financial planning Chennai, Private wealth management Chennai

Holistic investment planners, financial planning Chennai, Private wealth management Chennai

Financial Planning chennai India, Private wealth management chennai India, Investment Advisory India, Systematic Investment Plan, Mutual Fund SIP, Mutual Fund ELSS, Tax Saving scheme

  • Home
  • About Us
    • Who we are & What we do
    • Services
      • Financial Road Map
      • Retirement Roadmap
      • Asset Allocation Plan
      • Webinar
      • Money Management
      • Wealth Management
    • In the Media
    • Testimonials
    • What Makes Us Different
    • How we can help you
    • Specialties
    • Honors and Awards
    • Vision & Mission
  • Resources
    • Blog
    • Articles
    • Podcast
  • Ideal Client
  • Contact Us
Is Your Life Insurance Policy Hurting Your Portfolio

Is Your Life Insurance Policy Hurting Your Portfolio?-Discover How to Terminate Them with Financial Security

by Holistic Leave a Comment | Filed Under: Insurance

Life Insurance!

When you read it, what came to your mind?

Did you think of an insurance plan that promises a sum assured against life and a Lumpsum at maturity?

You probably have a couple of them in your portfolio, too. It is an investment while also securing your life. It was claimed to be a “genius product”.

It also reminds me of another genius discovery—Radium.

A century ago, cosmetics and healthcare products had radium in them. The manufacturers pushed these products to consumers, claiming—“It can make your skin glow in dark”—“It can cure illness as bad as cancer”.

It was portrayed as a—“miracle element”—just the same way.

Radium charged products were a must-have in every household until the radiation poisoning took its time to kill them inside out.

—One solution to all problems.

Does it sound familiar?

[the_ad id=”13526″]
It’s the unofficial tagline for every investment insurance plans out there in the market.

Today, the way investment insurance policies and ULIPs are being marketed—as one product for all your financial needs—they must be the radium in the world of personal finance. Especially the ULIPs, it is claimed to be the readymade financial plan for all.

Just because a product is termed “safe” and a majority is buying it, it does not mean it is safe.

Table of Contents:

  • A Slow Poison That is Investment Insurance
  • Revive Your Dying Insurance Portfolio
  • Get Out of Your Dilemma in 3-Steps
    • I. Identifying Your Escape Options
    • II. The Axing Of Investment Draining Policies

  • What Happens If You Surrender and Invest in Mutual Funds?
  • Your Moment to Take Control

A Slow Poison that is Investment Insurance

Over the years, insurance companies, their agents and advertisers have romanticized the investment insurance plans.

“Jack Of All Trades”

To increase the sale of insurance, they presented the insurance plans with tax benefits and the supposed investment benefits, and still do. They leverage the word “assured”, “guaranteed” and the excellent marketing skills developed over the years to sell a product.

In reality, they locked-up your savings for a meager life cover with no respectable appreciation. Investment insurance policies deceive on three different fronts. They are Insurance, Investment, and Tax Benefits. In life insurance, in case of death, your nominee gets paid but if you survive, you would get nothing. In order to get back something, people opt for life insurance policies that return a certain sum even if you survive.

But Insurance is not an investment. We are often sold insurance as an investment product instead of a protection product. Insurance is to protect your family from the uncertainty of your death. While investment is to accumulate wealth to meet your financial goals or to earn a regular income.
insurance is not investment What happens when you mix insurance and investment?

  • You become underinsured.
  • You won’t be able to accumulate sufficient wealth to meet your financial goals.
  • The cost of insurance reduces your returns.

So, when you attempt to achieve more than one financial goal with a single product it becomes complicated. This also makes it harder to assess whether it’s a good deal. Hence focusing on one goal is better.

Insurance agents would say that Endowment policies offer both insurance and investment. In reality, an endowment policy yields only 5-6 % and as an insurance product, it doesn’t offer adequate life cover.

Let me lay the facts down before you.

Investment Insurance

“Jack Of All Trades—Master of None”

It is evident from the table that investment insurance instruments are the poorest performers in all aspects.

  • They offer very low sum assured for the premiums paid, which makes them a questionable insurance product.
  • Investment insurance policies are only one of the many investment instruments which offer tax benefits under section 80C.
  • As shown in the table above, returns on ELSS mutual funds are way better than investment insurance policies, even if their returns are taxable.

Let’s see an example,

Imagine a person who wants to invest and have his life covered. Let’s call him Sugan.

Sugan is just 30 years old and wants to invest ₹100,000 a year. See, what different options he has to choose from.

Endowment PlanNote: For a fair comparison with the Endowment Plan, the contribution to PPF is limited to only 10 years.

Of the ₹1 Lakh, ₹12,250 is paid as the policy premium for the term plan and the rest is invested in Mutual Funds.

Here, if Sugan chooses the term plan along with Mutual Fund investment, he’d easily get ₹67 Lakhs at the end of 20 years. The return from Mutual Funds is almost twice that of ULIP’s return.

In case of his death, his family would receive a sum assured of ₹25 Lakhs from the insurance policy, in addition to the Mutual Fund value.
Investment

Revive Your Dying Insurance Portfolio

Getting to know the right and wise things is always exciting and often enlightening. Just as the old saying goes,

“Knowledge Is Power”

But what is the point of knowing that investment insurances stunt your investments if you don’t have the power to get rid of them?

Savings insurances and ULIPs: You buy it once. You have to pay a hefty sum as the premium. Now that you know savings insurance plans and ULIPs are not good for your financial plan, you want to remove them from your portfolio.

But you’re concerned about the Surrender charges and the loss of investment you will be facing.

And accepting loss should be the last thing for a wise investor. It’s the fundamental rationale, isn’t it?

In some rare situations, accepting a loss will fetch you good rewards than denying it. And more importantly, it will season you as an investor.

Get out of your dilemma in 3-steps

    1. Identifying Your Escape Options
    2. The Axing of Investment Draining Policies
    3. Tweaking of Financial Security

It is here, you must realize the importance of calculated risk.

i) Identifying Your Escape Options

You may have had legitimate reasons to buy these savings-cum-insurance policies.

In the past, traditional insurance policies were relevant and “wealth growing” was not a thing. Personal finance was all about savings and savings alone, then.

But financial planning is all about the financial future, isn’t it?

I want you to take a look at your insurance portfolio. How many savings-cum-insurance policies do you have?

—Is it one or two? Is it more than two?

Regardless, you still have a way out of these financial drains.

With your insurance plan, you may either,

    i) Surrender Your Policy or
    ii) Make it a Paid-up Policy or
    iii) Continue Your Policy.

There are some technical hurdles. But the biggest is, as discussed earlier, to endure the loss.

Yet, if you work around these hurdles and tweak up your financial plan, you can come out on top successfully.

ii) The Axing Of Investment Draining Policies

Even though there are three different options to optimize your insurance portfolio, not all options are equally adverse.

One may be worse than the other based on your current policy year. You may use a trial and error method to identify what suits your portfolio best.

We shall go through the different escape options that are available to you.

i) Surrendering Your Insurance Policy:

In simple terms, surrendering your policy would mean to give up your policy and get back the surrender value as on the date of surrender.
But there is more to it.

  • Your policy has no surrender value if you surrender in the first year.
  • Premium paid in the first year will not be accounted for surrender value calculation.
  • After successful premium payment of every year, the surrender value will increase gradually coming up to 90% of the premium in the last year of the policy term.

For example:
Just as seen in the example above—Let’s say you have an endowment plan of 20 years policy term; with a premium paying term of 10 years. It offers a ₹25Lakhs Sum Assured and ₹22Lakhs at maturity.

To date, you have paid the premium of ₹1 Lakh per year, for 2 years. See the table below.

Surrendering of Your Insurance policyIf you surrender your policy now, you will have to tank an apparent potential “loss” of ₹1.38 Lakhs.

But, is this better than the other two options?

Let’s compare and find out.

ii) Make it a Paid-up Policy

It is similar to surrendering. Except, you get the “Special Surrender Value” at the end of the policy term.

If you convert your policy to a paid-up policy, you don’t have to pay further premiums. The special surrender value is usually higher than the surrender value.

  • Your life cover amount will be reduced depending on the premiums paid.
  • Paid-up value will be calculated based on Sum Assured and a factor based on the number of premiums paid.
  • You will receive the paid-up value only after the completion of the policy term.
  • Unlike Surrender Values, Paid-up values are not guaranteed.

In our example, if you convert your policy into a paid-up policy, your sum assured will be reduced and is calculated as:

sum assuredIf we count the inflation in @ 6%, which is higher than the bonuses and other appreciation, it is technically zero appreciation for your investment that is locked-up for 18 years.

Moreover, it is a common mistake among investors, to stop their premium payment when they adapt to better investment instruments such as Mutual Funds. As a result, the policy lapses into a paid-up policy, leaving a sum locked-up with the policy.

On the other hand, let’s see what happens if you surrender your policy and get the same life cover as the paid-up policy offers. And invest the remaining surrender value amount in different instruments.

ppf deliversFrom the table, even the term plan with PPF delivers the same as your insurance policy.

Meanwhile, Mutual Fund investments are way beyond comparison. If you can get out of your comfort zone, the Mutual Fund will reward you the best.

But, is this it?

What Happens If You Surrender and Invest in Mutual Funds?

Continuing your insurance policy is—straight out—the least favorite option to choose.

We have seen surrendering your policy means “losing” a part of the premium, whereas making your policy paid-up gives it back to you.

But, what if you surrender your policy and invest the subsequent premiums along with the surrender value in Mutual Funds?

Could it nullify the potential “loss”? Could it deliver better than the paid-up option?

Let’s see what happens if you invest this surrender value and the rest of the premium in a mutual fund while having your life covered for ₹25 Lakhs.

surrender and invest mutual fundsIn terms of PPF: If we consider the special surrender value, with the paid-up option, it is a close call.

That is assuming: your policy does not incur any charges and a good bonus is paid. If you continue your policy, you will be paying an 18% GST over and above your savings insurance premiums.

Taking these into account, PPF investment is a sure winner by a good margin.

But if you are serious about your financial plan—since you have read this far, I believe you are—you may invest in Mutual Funds.

Look at the numbers in the table, even an average performing mutual fund scheme delivers twice as good as any investment insurance policy.

If you can find a better fund and work on your risk tolerance, you may even get 300% better appreciation than that of an investment insurance policy.

Your Moment to Take Control

It is hard to deliberately surrender your policy.

It is a daring step, far from anyone’s comfort zone.

But, in the long-term perspective, it gives you better returns, almost 3 times better returns.

It allows you to acknowledge the mistake—and thrive in times of financial stress. It will present the opportunity to attain financial maturity. I believe this is the very definition and purpose of calculated risk.

Understanding insurance policies can be pretty tiring. Have any doubts on how to optimally terminate your “investment insurance policies”?

Ask us in the comments below—or reach out to us.

Claim your free 30-minute consultation by clicking “Register Now” below.

[the_ad id=’13360′]

Reader Interactions

Previous article: HDFC Life Sanchay Par Advantage Plan [Review]: Should You Buy?
Next article: The Karvy Scam Fallout – How Safe Are Your Mutual Funds

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Client Login

Recent Posts

  • Tata AIA Life Insurance Wealth Pro Plan Review: Good or Bad?
  • Bajaj Allianz Life Smart Wealth Goal – Wealth Variant Plan Review: Good or Bad?
  • Max Life Savings Advantage Plan Review: Is It a Good Investment Choice?
  • Tata AIA Life Insurance Fortune Guarantee Pension Plan Review: Good or Bad?
  • HDFC Life Smart Woman Plan Review (2023): Is It Worth Investing?
Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

Google Reviews

Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

Footer

  • Articles
  • Gallery
  • Ideal Client
  • Jobs(Full Time)
  • Podcast
  • Services
  • Testimonials

Connect With Us

Holisticinvestment.in
10/15, Second Cross Street,
Seethammal Extn.,
Teynampet,
Chennai – 600 018,
INDIA.

Copyright © 2022. Holisticinvestment.in | All rights reserved.    Cared with ❤ by T-Square Cloud

×