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Should I surrender Jeevan Saral and New Jeevan Anand or wait till maturity?

Surrendering these policies and re-organizing your insurance and investment plan will serve you well in the long run

I have two insurance policies:
1. LIC Jeevan Saral - Sum assured Rs 5,00,000, annual premium Rs 24,020, and policy term 21 years. I have already paid premiums for 7 years.
2. LIC New Jeevan Anand - Sum assured Rs 8,00,000, annual premium Rs 44,000 and policy term 21 years. Premiums for 2 years have been paid.

I want to know:
1. What would be the maturity value if I continue with these plans?
2. What would be the surrender value if I surrender these plans now?
3. What would be the paid-up value if I make them as Paid Up?


1. On maturity, you get a guaranteed amount of Rs 13 Lakh plus any additional bonus that the LIC may declare, which isn't guaranteed. This is as against a total premium of Rs 14.28 Lakh that you pay. Considering the past record, these policies have given returns of only around 4-5% per annum. For a timeframe of 15-20 years, this is extremely poor return.

2. On Surrender, since you haven't completed 3 years in New Jeevan Anand policy, you will not get back anything. LIC's Jeevan Saral policy surrender value will be the greater of the guaranteed surrender value (GSV) or special surrender value.
· GSV is equal to 30% of the total amount of premiums paid (excluding the premiums for the first year). This comes to Rs 43,236.
· Special Surrender Value will be 100% of the Maturity Sum Assured, if 5 or more years' premiums have been paid. The Maturity Sum Assured for this will be corresponding to the term for which premiums have been paid. To get the exact details you may contact the insurer.

3. If you make the policy paid up, your paid up value will be Rs 1,66,000 {Sum Assured*No of premiums paid/Total premiums to be paid)} but you get this only at the end of the entire policy term of 21 years.

In our opinion, you should surrender both policies even though you will incur a loss on the premiums already paid. The reason is that you neither have sufficient insurance, nor great investments with these two products. You have a total insurance cover of just Rs 13 lakh which looks grossly inadequate. And a measly return of 4-5% per annum over a 20 year time frame is hardly anything to feel happy about.

Therefore, it's better to surrender both of them, take a bit of a loss, and re-orient your insurance and investments for long-term success.

Here's what we recommend.

Buy a good term insurance policy with much greater insurance coverage. It will come at a fraction of the premiums you are currently paying. The balance that you save from your current premium outgo of Rs 68,000 every year should be invested in 2-3 top rated diversified equity funds. Over a 15-20 year period, this should help you accumulate far greater wealth than you could hope to achieve through your current insurance plans.

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