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I bought a Jeevan Saral plan in 2013. I am paying a premium of ₹25,221 for a sum assured of ₹5.25 lakh. Can you tell me what will be the maturity amount after 20 years? Or is it better to surrender the policy now?
- Amit Virmani
LIC Jeevan Saral is an endowment policy that has an element of insurance and investment in it. Endowments plans mostly offers modest returns which may not even beat inflation. On maturity, you will get the sum assured plus loyalty additions, if any. Loyalty additions may be payable from the 10th year on wards, but the rate would be at the discretion of LIC. Therefore, we will not be able to tell you how much money you will get on maturity.
You can consider surrendering the policy as it offers you a very small insurance cover of ₹5.25 lakh. It is also likely to offer you very modest returns. You may suffer losses if you surrender the policy. But you may be able to get rid of a bad investment and it will also help to make better returns on your future investments. You can surrender the policy after three years. The surrender value will be the greater of the guaranteed surrender value and special surrender. The guaranteed surrender value will be equal to 30% of the total amount of premiums paid minus the first-year's premium and all the extra premiums and premiums for accident benefit / term rider. Special surrender value will be equal to 80% of maturity sum assured if 3 or more years' but less than 4 years' premiums have been paid.
In future do not buy hybrid products for getting a life cover. Always buy a term plan for your insurance needs. For your long-term goals, you should go for equity mutual funds. Equity has the potential to offer better returns than other asset classes over a long period of time. If you have an investment horizon of more than five years, you can consider investing in equity mutual funds.
This article was originally published on March 14, 2016.
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