I have a LIC Jeevan Saral policy. My yearly premium is around ₹48,000. The term is 35 years, and the maturity benefit is ₹20 lakh and death benefit of ₹10 lakh. I have paid premiums for four years and didn't pay the 5th year premium. The policy has lapsed. I want to surrender the policy. I have two options.
Option A: If I surrender it now I will get back 90% of the amount that I paid as premium for past four years. (approximate loss of ₹12,000)
Option B: Pay the 5th year premium (with late fees etc) and then surrender the policy. I will get back 100% of the premiums I had paid (maybe with some deductions). But overall loss may be quite less than ₹12,000.
Which option should I go for?
- Gaurav Patil
The surrender value you have listed is not guaranteed. Guaranteed surrender value is 30% of the total premiums paid minus the first year's premium. You have stated special surrender value which is at the discretion of the insurer. Do not wait for another year. If the insurer has agreed to pay you special surrender value now, surrender it now and curb your losses. It is not logical to pay another premium of ₹48,000 to reduce your losses by ₹3,000-4000. If you invest ₹48,000 in a fixed rate instrument fetching 8.5%, you will get around ₹4,000 rupees without a chance of loss of principal.
Surrender soon and get rid of a bad investment. For more details click on this link.
This article was originally published on October 15, 2015.
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