I have 9 Jeevan Saral policies started in June 11, 2011. All of them completed 5 years on June 11, 2016. They all have different maturity dates. I have paid ₹1,22,560 as premium for 8 policies and ₹30620 for another policy. Total premium paid is ₹1,53,180. I would like to surrender these policies as they have completed 5 years. As per my understanding I will get special surrender value which is 100 percent of the premiums paid. Will I get all the premiums which I have paid or will there be any deduction. If so how much it will be?
- Mohisinoddin Mohammad
LIC Jeevan Saral is an endowment policy which is silent on its expenses just like other plans in this category. Such insurance-cum-investment plans typically offer a very small insurance cover and they also offer very modest returns.
Unfortunately, on surrender you will not get back all the premiums that you paid. The policy rules say that surrender value will be the greater of the guaranteed surrender value and special surrender value where:
Guaranteed surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and premiums for accident benefit / term rider.
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 sum corresponding to the term for which premiums have been paid under the policy.
Though you will make losses on surrender, it is not wise to continue investing in a bad product.
Buying an endowment plan for investment is not a great idea. It compromises your life insurance cover and returns. In future, always buy a pure term life insurance plan to buy an adequate life insurance cover. Term insurance products are ideal for insurance cover because they have very low premiums. You should invest in equity mutual funds to achieve your long-term goals of five years and above.