Surrender your endowment and buy a pure term cover to meet your insurance needs
24-Nov-2014 •Research Desk
Shall I continue with my LIC Jeevan Saral insurance plan? Will it be a good option as an insurance plan, or would it be better to opt for another investment? I have purchased it 3 years ago and the surrender value now is ₹30000 against the ₹54000 of premiums paid.
- Amit B. Padalkar
It would be better for you to buy a pure term insurance plan for risk cover and use mutual funds to fulfill your investment needs. We would advise surrendering LIC Jeevan Saral, which is an endowment policy. It is silent on its expenses just like other plans in this category. According to the policy rules, the guaranteed surrender value is equal to 30 per cent of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums. In your case, the surrender value is ₹30,000 as you say. Though you will lose some of the premiums paid, we still recommend that you surrender this plan to earn a better return. It is better to move out of this policy and invest in mutual funds which can give you flexibility with better returns.
Surrendering this plan will leave you uninsured, so make sure to buy an adequate term insurance before you take this action. Invest the premiums saved in highly rated mutual funds. For first-timers large and midcap funds such as Quantum Long Term Equity, ICICI Pru Dynamic and HDFC Equity may be good options. You may also refer to a similar query here Surrender LIC Jeevan Saral Policies.
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