I bought Max Life Partner Plus plan in June 2013. I am paying a premium of ₹. 60000 per year. This is supposed to take care of my retirement by paying me a fixed amount every year (non-taxable since it is deferred endowment and not annuity from age 60 to 75). Should I surrender this policy or continue with it? If surrender, should I do it now or wait for some more time to get better a surrender value?
- Saurabh Majumdar
Yes you should. Max Life Partner Plus Plan (Limited Pay Endowment To Age 75) is an Endowment plan and as per this plan you will pay a premium till age 55 and there will be payout from age 61 till age 75. The payout from age 61 to 75 will be a guaranteed amount equal to 7.5% of the Sum Assured that will be paid every year, plus any bonuses if any, though these bonuses are not guaranteed.
Though you will make losses upon surrender, it is not wise to continue investing in a bad product. This policy will acquire a guaranteed cash value if it has been in force for at least three years and provided all premiums that have fallen due have been paid. The guaranteed cash value in this Policy will be the higher of (a) 30% of all premiums received excluding the first year premium or (b) a net level premium reserve as per table filed with IRDA.
Such policies do not prove beneficial for either insurance or investment. The sum assured generally will not suffice for your family in case something were to happen to you. Though you will make losses upon surrender, it is not wise to continue investing in a bad product. 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 for insurance cover because they have very low premiums. You should go for balanced or equity mutual funds to fund for your long-term goals of five years and above. Equity has the potential to offer better returns than other assets over a long period.