I bought LIC Jeevan Saral in August 2012 (sum assured of 5 lakh for 20 years). I bought it for investment purpose. Should I surrender it? How much will be the surrender value?
- Bharat Anchal
LIC Jeevan Saral is an endowment policy which is silent on its expenses just like other plans in this category. Though you will make losses upon surrender, it is not wise to continue investing in a bad product. Such insurance-cum-investment plans typically offer a very small insurance cover and they also offer very modest returns.
The surrender value will be the greater of the guaranteed surrender value and special surrender.
Guaranteed surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.
Special Surrender Value will be 80% of Maturity Sum Assured if 3 or more years' but less than 4 years' premiums have been paid; 90% of the Maturity Sum Assured, if 4 or more years' but less than 5 years' premiums have been paid and 100% of the Maturity Sum Assured, if 5 or more years' premiums have been paid. The Maturity Sum Assured for this para will be the Maturity Sum Assured corresponding to the term for which premiums have been paid under the policy.
You mentioned that you bought this policy for investment purpose. Buying an insurance plan for investment is not a great idea. It compromises your life insurance cover and returns. In future, always buy a pure term life insurance plan to buy an adequate life insurance cover. Term insurance products are ideal for insurance cover because they have very low premiums. You should invest in equity mutual funds to achieve your long-term goals of five years and above. If you are a new comer to the stock market, choose a top-rated balanced scheme and start investing every month via a Systematic Investment Plan (SIP). If you are familiar with the stock market, you can invest in a diversified equity scheme. You must continue with your SIP investments irrespective of the market conditions. This will help you to average your purchase cost and enhance your returns.