My Jeevan Saral policy will complete eight years in July 2016. (Date of Commencement is 07.07.2008, date of maturity is 07.07.2043 and maturity sum assured is ₹5,20,950). If I surrender the policy after/before July 2016, how much money will I get? And how will the money be taxed? I am currently paying a monthly premium of ₹1,021.
- Prabhat Kumar
Jeevan Saral offers a surrender value that 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 premium. That means if you surrender the policy now, you will get ₹24,810 [30% of (₹94,953 minus ₹12,252)]. If you surrender the policy after paying three more premiums till July 2016, the guaranteed surrender value will be ₹25,729 [30% of (₹98016 minus ₹12,252)].
The special surrender value will be 100% of the maturity sum assured if five or more years' premiums have been paid. 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. You will have to contact the insurer to get the exact figure.
The surrender receipts of your Jeevan Saral policy is tax-free (this applies to all policies bought before 31/3/12 and if sum assured is more than 5 times the annual premium).
In future, do not buy endowment plans like Jeevan Saral. Such insurance-cum-investment plans typically offer a very small insurance cover and they also offer modest returns. These plans are also silent on expenses. 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 April 22, 2016.
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