I purchased LIC New Endowment Plan in July 2015 for 25 years. I have to pay the annual premium of ₹14711. The Sum Assured is ₹375000 and Accidental death benefit of ₹375000. Should I stop paying premiums or continue this plan? I already have a term plan which has the sum assured of ₹50 lakh from TATA AIA.
- Debayan Das
LIC New Endowment Plan is an endowment policy which is silent on its expenses just like other plans in this category. Though you will make losses, it is not wise to continue investing in a bad product. We advise you to stop further premiums, and to forgo the premium that you paid in the first year of the policy. The surrender option will not be available as you haven't completed 3 years.
Such insurance-cum-investment plans typically offer a very small insurance cover and they also offer very modest returns.
Do not mix your insurance and investment needs in future. Term insurance products are ideal for insurance cover because they have very low premiums. Evaluate your existing term plan and make sure that you are sufficiently covered under the plan.
This article was originally published on June 13, 2016.
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