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Should I discontinue my Money back plan?

The surrender value will be the higher of the guaranteed surrender value or special surrender value depending on the term of the policy and the premiums paid

I have LIC money back plan (new Bima Gold) with Sum Assured of ₹10,00,000 and yearly premium of ₹34464. I have already paid 5 premiums, and received 1 money back of ₹1 lakh last year. I am planning to discontinue the policy and instead buy a new Term Insurance plan of ₹1 crore (Estimated Yearly premium of ₹12-13k for a smoker) and a family floater medical insurance of ₹15 lakh (Estimated yearly premium ₹15-18k). I have no medical insurance apart from the company provided one. Please let me know is this a prudent decision to make.
- Shamik Biswas

You have taken a wise decision. LIC New Bima Gold is an insurance-cum-investment product. Money back policies are similar to endowment insurance plans where the policy provides for partial survival benefits during the term of the policy. These type of products are expensive, they mostly fail to offer adequate insurance cover and they don't offer good returns. The ideal solution for you would be to exit this policy right away. Even though on surrendering the plan you will incur a loss, it will help you to stop a bad investment and earn better returns in a pure investment product.

The surrender value will be the higher of the guaranteed surrender value or special surrender value depending on the term of the policy and the premiums paid. You may contact your insurer to get the detailed information on the surrender value.

For your pure term cover, you may consider online term plans such as Max online term plan and Aegon Religare iTerm plan . Both these companies have good claim settlement ratio and premiums are comparatively cheaper. Find out the premiums applicable for your age under these policies and select the one that suits your budget. Make sure to disclose all personal and health-related details so as to avoid any inconvenience for the family just in case the claim arises. For a family floater plan you may consider ICICI Lombard iHealth and Religare Health care.

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