How to invest my life insurance maturity proceeds

Glad to hear that you received a good amount from LIC of India against maturity of your policy which your father took when you were young.

The idea that you have sounded – investing the money in mutual funds and draw SWP to support your existing home loan EMI – is not a good one. Instead of that, you should repay Rs 12.87 Lakhs (which you have received from LIC of India) from the remaining balance amount of the home loan of Rs. 18.50 Lakhs! After that, you can request the home loan company to reduce your monthly EMI (the reduction will be substantial) or reduce the loan tenure.

In case the company agrees to reduce the monthly EMI, the amount thus saved can be invested in mutual funds through monthly SIPs. In case, the company do not reduces the EMI and instead reduces the tenure then you will be free from the home loan liabilities soon. As you are young, reducing your liabilities as early in your age as possible will help you focus on your other financial goals, like children education / marriage and your own retirement etc.

One more wise thing would be to increase your life insurance cover. Currently, your life cover is Rs. 50 Lakhs only. Your salary is Rs. 86,000 per month and according to a common thumb rule used by financial advisors, your life cover ideally should be 12 times your annual income (Rs. 86,000 x 12 months x 12 times). Therefore, in your case, the life cover should be at least Rs 1.25 Crores! If you add your home loan liabilities then the life cover should be increased to the extent of the outstanding principal amount of the loan.

For moderate risk takers, investing in mutual fund schemes of large cap and balanced fund category could be the best choice. You may choose top performing funds from these categories from here - https://www.advisorkhoj.com/mutual-funds-research/top-consistent-mutual-fund-performers

Hope the above helps! Thanks for writing to us !!