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Should I exit Jeevan Anand policy?

Surrender your policy and buy a term insurance instead

I have LIC Jeevan Anand with an annual premium of Rs 68,000 for a 16 year term. My sum assured is Rs 10 Lakh. I have paid 2 premiums so far. Should I continue or exit?
-Biswajit Behera

You should surrender your policy and buy pure insurance and investment products instead. For insurance, go a for a pure term insurance policy. You can get a much a higher insurance cover for a much lower premium. For investments, consider mutual funds which can provide you better returns.

Please note you don't get anything back upon surrendering your insurance policy before three years. That means you will stand to lose Rs 1,36,000 that you have paid in first two premiums. But it's better to incur that loss and move on by re-organizing your insurance and investments.

However, you might argue what if I pay the premium for the third year as well and then surrender? Well, that will only widen your losses - against a total premium outgo of Rs 2,04,000, your guaranteed surrender value (GSV) that you get back will be Rs 40,800 (30% of total premiums paid, excluding first year premium).

Therefore, it is better to surrender now.

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