I bought a LIC Jeevan Saral policy in December 2008 with a monthly premium of ₹2,042 for a 35-year term. The sum assured is ₹5 lakh. I am not really sure if this is a good plan, so wanted to get you view. Should I surrender the policy? Can you please guide me?
- Amit Pamnani
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 on 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.
The guaranteed surrender value will be equal to 30% of the total amount of premiums paid minus first year premium and all the extra premiums. In your case, the guaranteed surrender value will be 30% of ₹1,47,024 which will be approximately ₹44,107. You will have to get in touch with LIC to confirm this figure.
Special Surrender Value will be 100% of the Maturity Sum Assured since you have paid more than 5 years premiums. The Maturity Sum Assured for this will be the Maturity Sum Assured corresponding to the term for which premiums have been paid under the policy.
Do not mix your insurance and investment needs in future. Always buy a pure term life insurance to buy an adequate life insurance cover. Term insurance products are ideal to buy a life insurance cover because they have very low premiums.
This article was originally published on March 30, 2016.
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