Should I surrender Jeevan Anand? | Value Research The surrender value of the policy after the completion of three years is 30% of total basic premiums paid minus first year's premium
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Should I surrender Jeevan Anand?

The surrender value of the policy after the completion of three years is 30% of total basic premiums paid minus first year's premium

I bought a Jeevan Anand policy in 2010 with an annual premium of ₹58,097 and a sum assured of ₹11 lakh. I have observed that Jeevan Anand offers a bonus of approximately 4 per cent. I have read on your website that the only solution is to surrender the policy asap, and incur considerable loss. I have figured out that if I invest ₹60,000 per year in some FD or any other product every year, I will earn approximately 7-8 per cent returns. I might also earn 11-12 per cent. Tell me if I am right.
- Piyush Kejriwal

Jeevan Anand is a combination of endowment and whole life plans. You have rightly observed the features and bonus declared by the policy. Surrendering the policy is the best option. The surrender value of the policy after the completion of three years remains 30% of total basic premiums paid minus first year's premium. LIC may pay a higher value at its own discretion.

It is true that you will earn a higher return if you invest the premium amount in a better investment avenue. However, you are making a wrong comparison here. Ideally, you should not compare an insurance product with an investment product. The purpose behind buying an insurance product is to buy an insurance cover so that your financial dependents have something to fall back on if something happens to you. Only an insurance product can do this job.

That is why we always ask our readers to buy a pure term plan to buy an adequate life insurance cover. In your case, you should buy an adequate life insurance cover with a pure term insurance plan before surrendering the existing policy. Once you surrender your insurance policy, you will lose your insurance cover provided by it.

You can buy a large life insurance cover with a low premium if you opt for a pure term plan. Invest the rest of the money (your current premium - the premium for the term plan) in an equity mutual fund scheme to earn better returns. Remember, you should invest in equity only if you have an investment horizon of at least five years.


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