Should I stop Endowment Assurance Policy?

I have an LIC Endowment Assurance Policy (T.No.14). The sum Assured is ₹2 lakh (final maturity without any claims is approximately ₹4 lakh). The policy term is 21 years. Commencement date 08/02/2006 and the yearly premium is ₹9,227. Is it advisable to stop this policy? If I stop now, I will get ₹90,000. I have already taken up a separate term policy of ₹1 crore from Aegon Religare. My age is 38. I have a similar LIC policy which will be maturing in another six years. My goal is to generate retirement corpus. I am staying in a rented house with four dependents.
- Ramakrishna M G

The Endowment Assurance policy will pay sum assured upon demise of the policyholder. If policyholder survives policy term, the policy will pay a lump sum at a desired age. The lump sum can be reinvested to provide an annuity during the remainder of his life or in any other way considered suitable at that time. Like its peers, this policy does not disclose any expenses. This policy declares annual bonus out of company's profits at discretion of the insurer. Surrender the policy, as it is neither a good insurance nor a good investment. It is good that you have already bought a plain term cover. Continue with it.

Do not buy insurance plans for investment purpose. Always in equity mutual fund schemes to achieve your long-term financial goals like retirement. Invest regularly in one or two top-rated diversified equity scheme to build a retirement corpus. Here is link to best diversified equity schemes.

This article was originally published on November 30, 2015.