In one of the earlier posts, we had discussed why you should not purchase traditional life insurance plan. Traditional insurance plans give you double whammy of inadequate life cover and poor returns.

After reading the post, you know you need to stay away from such financial products. But what should you do if you have already purchased such a plan? Should you continue paying premium or should you surrender such plans?

You realize by continuing to pay premium, you will keep earning low returns. Life cover was never really a forte of traditional plans. If you surrender, you face heavy surrender charges and will get back only a portion of total premium paid.

This is what makes surrendering the insurance plan so emotionally difficult. There is an additional option of making the policy paid up where you do not pay any further premium but the policy continues till maturity with reduced benefits.

So, what do you do? Continue, Surrender or make the policy paid up? In this post, we will help you understand how to approach this continue or surrender problem.

**In this post, I have considered only traditional life insurance plans. There is no discussion on Unit Linked Insurance plans. Hence, any reference to a life insurance policy shall be read as a traditional life insurance policy unless stated otherwise. **

There are following aspects to consider when you think about surrendering (or making it paid up) your traditional life insurance policy.

- Surrender charges/Paid up benefits
- Expected return on erstwhile and future investments
- Reversal of tax benefits: You get the tax deductions for premium paid under Section 80C. As per Section 80C the Income Tax Act, if you do not pay premium for two consecutive years, tax benefit availed through payment of first year premium shall be reversed. For example, if you pay the premium in the first year and discontinue after the first year, premium paid in the first year shall be added to current year’s income and taxed accordingly. There shall be no reversal of benefits if you surrender after paying premium for two years. If you want to know more about tax implications of life insurance, you can read my post published in Business Standard.
- Time to maturity of the policy
- Other actuarial inputs such as age of the policy holder etc

We will discuss these parameters in detail in this post.

## When does my insurance plan acquire surrender value?

As per IRDA Non-Linked Insurance Products Regulations, 2013, if the premium payment term is 10 years or more, your life insurance policy acquires surrender value only after payment of full premium for three years. If the premium payment term is less than 10 years, the insurance plan acquires surrender value after payment of full premium for two years.

If you discontinue paying premium before the plan acquires surrender value (2 or 3 years as may be applicable), you won’t get anything back. If you discontinue after the insurance plan has acquired a surrender value, you need to communicate your decision to the insurance company. **If you don’t tell them, your policy will continue as a paid up policy.**

**Book Suggestion**: You can be Rich too: With Goal Based Investing (P.V.Subramanyam, M.Pattabiraman)

## What will be surrender value for my policy?

As per IRDA Non-Linked Insurance Products Regulations, 2013, the surrender value for a regular premium and limited premium payment plans (and not single premium plans) shall be the sum of guaranteed surrender value and the surrender value of any bonus/additions already accrued to the policy. **The guaranteed surrender value shall be atleast**:

- 30% of the total premium paid less any survival benefits already paid if surrender between second and third years, both inclusive (after payment of 2
^{nd}premium till the end of 3^{rd}year). - 50% of the total premium paid less any survival benefits already paid if surrender between fourth and seventh years, both inclusive (after payment of 4
^{th}premium till the end of 7^{th}year) - If the term of the policy is less than 7 years, 90% of the total premium paid less any survival benefits already paid
- The value beyond the seventh year shall be filed by the insurer with IRDA and get clearance. The exact percentage will be mentioned in the policy document.

**There is no surrender value for riders, if any, in the policy. **

You can see that the surrender penalty is heavy in the initial years and goes down (as a percentage of total premium paid) as the time passes. This is to incentivize the policy holders to continue paying premium for their policies for longer periods. The high surrender penalty (or low surrender value) in the initial years acts as a big deterrent to customers in cancelling their traditional plans.

The actual surrender value will be higher of guaranteed surrender value or special surrender value. Special surrender value is calculated by adding paid up sum assured and accrued bonuses and the multiplying the sum with special surrender factor. Special surrender factor depends on multiple factors such as completed policy years, time to maturity, age at surrender etc. This factor may or may not be available in the policy brochure.

**Finding out the surrender value of the policy is not much of a problem. You can call up customer care or visit the nearest branch of the insurer to find the exact value. **You can also read the policy terms and conditions to get an idea of the surrender value.

## What is a Paid up policy?

A paid policy is a policy that requires no further premium payments and continues to provide paid up (reduced) benefits till plan maturity. **Please note you can make a policy paid up only after the policy has acquired a surrender value.**

So, rather than surrendering your policy, you can also make the policy paid-up. As discussed, if you make the policy paid up, you do not need to pay any further premiums but your policy continues till its original maturity but with reduced benefits. Your paid up Sum Assured is in same ratio of the Original Sum Assured as total number of premium paid to total premium payments as per the original terms. For instance, if your policy and premium payment term was 20 years with a Sum Assured of Rs 10 lacs. If you make the policy paid up after paying premium for 5 years, your paid up Sum Assured will become 5/20 of the Original Sum Assured i.e. Rs 2.5 lacs.

The basic idea is that your death and survival benefits get reduced in the same proportion. In case you have a participating plan, you may or may not be party to future bonuses declared by the insurance company. You can read the policy terms and conditions for the exact treatment. A few policies do not share any future bonuses while the other plans share in proportion of reduced Sum Assured to Original Sum Assured. Typically, bonuses are declared per Rs 1000 of Sum Assured.

Hence, depending upon the policy terms, your maturity benefit will be:

Paid up Sum Assured + Bonuses accrued before making the policy paid up

Or

Paid up Sum Assured + Bonuses accrued before making the policy paid up + Future bonuses declared (for paid up Sum Assured)

The treatment is similar in non-participating plans too.

## Continue or Surrender or Paid-up

So, you have three options:

- Continue the policy: You continue paying premium. Surrender charges and reversal of tax benefits are not applicable. You continue to earn sub-optimal returns and have a low life cover.
- Surrender the policy: You face heavy surrender charges and potential reversal of tax benefits if surrender after the first year. No need to pay any further premiums. Life cover terminates
- Make the policy paid up: Surrender charges and reversal of tax benefits are not applicable. You life cover and maturity benefit gets reduced. No need to pay any further premiums. Continue with reduced life cover.

## Illustration

We pick up ICICI Pru Assured Savings Insurance Plan. It is a non-participating non-linked traditional insurance plan. To find out more about this plan, please read our post on traditional life insurance plans here. We have picked up a non-participating plan since this brings down the number of assumptions for comparison.

We pick up a plan with the premium payment term of 10 years and policy term of 12 years i.e. you pay the premium for 10 years while the life cover is for 12 years and you get maturity benefits after 12 years.

*We pick up an annual premium of Rs 1 lac for a 30 year old non-smoker male. The Sum Assured is Rs 10 lacs. The maturity benefit will be Rs 13.86 lacs. This is equivalent to an IRR of 4.35% p.a.*

As discussed earlier, once you have purchased the product, you have three options.

- You can continue to pay regular premium and continue policy till maturity
- You surrender the plan and invest the surrender value and the remaining premium installment into an investment product say PPF or mutual funds. You will have to purchase an additional term life cover so that you also have comparable life cover.
- You make the plan paid up. No further premium payments. Invest remaining premium installments in PPF or mutual funds. You will receive paid up maturity at the end of 12 years from the date of first premium and investment value from your PPF and MF investments.

**Reading Suggestion: How to Retire Rich: Invest Rs 40 a day? (P V Subramanyam).**

## Approach for making a decision

You already know the maturity benefit under the insurance plan i.e. Rs 13.86 lacs.

You surrender the policy if the investment of surrender value along the remaining premium installments gives a value higher than Rs 13.86 lacs. However, you must also consider that the traditional plan provided you insurance benefits too. Hence, in addition, you must also purchase a term cover that provides the same sum assured (Rs 10 lacs) as the traditional insurance plan.

Similarly, you make the policy paid up if total of paid up maturity benefits and investment of remaining premium installments results in a value that is higher than Rs 13.86 lacs. Under a paid up policy, you are entitled to paid up death benefits. However, to simplify the problem, let’s take an additional term cover of Rs 10 lacs in this case too.

You can also compare the results for continuing the plan, surrender and making the policy paid up to make the decision.

**The result will depend upon multiple factors such surrender value factors, no. of years policy has already been run, years to maturity of the policy, age of the policy holder, assumed return on investment. **

*For the plan under consideration, there was mention of Guaranteed Surrender Value Factors for premium and guaranteed additions and non-guaranteed surrender value factors for calculation of special surrender value. Though these values have been considered, the values have not been shown in the illustration to improve readability of the post.*

All the premium installments already paid should be considered Sunk Costs i.e. the cost that has already been incurred and cannot be reversed. So, forget about the premium installments already paid. Keep your emotions out. Make the decision on the basis of numbers alone.

*Though utmost care has been taken to calculate surrender and paid up benefits value as accurately as possible, there may still be a few errors. If you find yourself making such a decision, you can talk to your insurance company to get much accurate numbers.*

### At 8.7% p.a. return on investment in a PPF Account

ICICI Pru ICare II has been considered for term plan. The premium for Rs 10 lacs for 15 years for a 30 year old male is Rs 4,469 (inclusive of service tax). If you surrender the policy in the first year, tax benefits under Section 80C will be reversed. 30% tax slab has been assumed for the policy holder. This taxation aspect has been accounted for. Decision to make the policy paid up or surrender is assumed to be made at the end of the year. The comparable values have been highlighted in light blue.

**Given the original maturity benefit of Rs 13.86 lacs**, there is not much to gain (in fact you lose out) if you surrender the policy after year 2 (i.e. payment of second year premium). Even if you plan to make the policy paid up, there are minor benefits if you do that in the initial years.

**You can see that IRR for the original maturity was a meager 4.35% p.a. The product design (and surrender penalties) is such that you will struggle to outperform that.**

### At 12% p.a. return on investment in mutual funds

You can see that there are benefits if you surrender or make the policy paid up in the initial years.** If you are closer to maturity, you are better off continuing with the policy till maturity.**

## PPF or Mutual Funds

An additional point to consider is the assumed rate of return. What should you use? One can argue since these insurance plans are long term products; mutual funds will suit the best. On the other hand, traditional insurance products are more debt like products that provide low but almost guaranteed returns. There are associated tax benefits too and hence PPF will be an apt replacement.

Here is an excerpt from one of my earlier posts.

*PPF provides guaranteed returns (although Government announces the return every year). Hence, there is little volatility from PPF investments. A combination of term plan and PPF will provide the same tax benefits as the non-participating plan. Insurance premium for non-participating plan qualifies for deduction under Section 80C. The maturity and death proceeds are exempt from income tax. Both term insurance premium and PPF investment can be claimed for deduction under Section 80C. Interest from PPF is not taxable and proceeds from PPF are tax-free. Hence, a non-participating plan and our combination of PPF and term provide exactly the same tax benefits.*

*Given the risk characteristics and tax treatment, I prefer PPF as a replacement for investment needs.*

### Observations:

*The earlier you surrender or make the policy paid up, the better it is.**As you move towards maturity, the surrender charges will nullify the impact of higher returns**If you are closer to maturity, then you are better off continuing with the plan till its maturity.**The results are for a specific product. The results can be entirely different in other plans. This plan had a maturity of 12 years. Plans with maturity of 20 or 25 years can throw up entirely different results. This is because you will earn high return on investment for a greater number of years. This is likely to counter surrender charges better.**Products will vary based on surrender value factors and other actuarial inputs. This will impact your decision.**Between surrendering the plan and making it paid up, the assumed rate of return on investment tilts the balance. A higher assumed rate of return will favour surrender of plan.*

## PersonalFinancePlan Take

You can see there are benefits if you surrender or make the plan paid early in the policy term. As you move towards policy maturity, continuing with the plan may actually be a better alternative. For the surrender value and information about paid up benefits, you can contact the insurance company. Alternatively, you can seek professional help from fee based financial planner or a SEBI registered investment advisor.

This is also a commentary on product design. Though one can argue the product design acts as a deterrent to surrender plans midway and promotes long term investment. On the other hand, one can argue that the plans are so skewed in favor of insurance companies that you may have to continue with the plans despite potential of twice or even thrice as high returns (8.7% p.a. and 12% p.a. vs 4.35% p.a.)

Needless to say, it is better if you do not purchase such plans in the first place. As I have mentioned many times before, there is no need to mix insurance and investment. However, if you have purchased the plan, do a purely mathematical analysis and decide the future course of action. As we have seen, the smarter choice can even be continuing with the plan.

*An additional point to note: in case you surrender your policy or make the policy paid up, you must compensate for the reduction in total life cover by purchasing an additional life cover. No matter what you do, you must have adequate life insurance at all times. My preferred mode of life insurance is term insurance.** *

### Book Suggestion

**How to Retire Rich: Invest Rs 40 a day? (P V Subramanyam). Hindi version is also available**

*Image Credit: Moolanomy, 2012. Original Image and information about usage rights can be downloaded from Flickr.com*

## 269 thoughts on “Life Insurance: Continue or Surrender or Paid-up”

DanGood informative examples…

Interested to see if you can put an example of Whole Life Insurance VS (Term + mutual funds/PPF) options.

Not sure if due to insurance benefit of Whole Life, it may not stack up?

Thx

Deepesh RaghawThanks Dan!!! Am glad you have found the articles useful.

For whole life insurance, the situation won’t change much. Returns-wise, I don’t think there will be much difference.I mean the results will be as poor as the traditional plans I discussed.

The additional dynamic is the tenor of whole life insurance policies. In India, we don’t have term insurance plans greater than 30-35 years.

However, if you save and invest well, you wouldn’t need life insurance after 30-35 years.

Whole life insurance plans are not too popular in India either.

DevNeed your help.

Max life whole life participating plan 100 years

Premium paid 13,500 for 10 years

Surrender value 62k

What should I do. My age 34

Regards

Dev

Deepesh RaghawLooks like a bad choice, Dev.

Have not gone through the exact plan.

Suggest you go through my post on Jeevan Umang.

https://www.personalfinanceplan.in/insurance/review-lic-jeevan-umang/

Think it is better to exit.

GuruExcellent and very meaningful articles. I am one of those guys who got in to this useless new Jeevan Anand with a very high maturity value. As you have mentioned, its a very emotional decision to surrender and get back nothing. Please suggest if it is a good option to make it to a paid up policy

New Jeevan Anand – 35 years (15 policies in total maturing from year 21 till 35)

Quarterly premium – 92000 (Yes, ninety two thousand)

number of payments made so far – 9

to make it as paid up policy, i need to make 3 more payments.

My current plan to is to make payment for 3 years and convert this to paid up policy. please advise. (I dont get any tax benefit under 80C as my PF and other savings helps me to reach 2L)

Deepesh RaghawHi Guru,

Thanks Guru. Am glad you liked the post.

That is some serious amount.

Without going too much into mathematics, making it paid-up appears a wise decision.

Just one thing, purchase a term plan before you surrender so that you are always adequately insured.

Please do share with friends and family.

MitarthHello…

Your blog sounds logical.

I have jeevan anand having total of 11 policies fir 30 years maturing at the age of 55 to 65 years of mine.

Total premium for a year is 60874, i pay it hly.

I have completed 3 years of the policy.

What should i do?

Should i pay up the the policy or continue? Because continuing the policy does not sound good option from you point of view.

Kindly advice.

Deepesh RaghawHi Mitarth,

Make the policies paid up.

Alok barveSir, pls help me out… I’m confused….

I have paid lic premium for 3 and half years around 1,31000. And I’m paying 36000 a year for 35 years.It’s lic’ s retire and enjoy… I already have a term plan of Aegon life which i did it recently. Should I continue with my lic or should i invest that money somewhere else…. If u think i should stop tat policy, then should i surrender or make it paid up..??

Deepesh RaghawDear Alok,

Retire and Enjoy is not a product by LIC. It is a combination of policies (New Jeevan Anand) structured by LIC agents.

In my opinion, a poor investment choice.

If we discuss the numbers, it will be a good choice to surrender or make it paid up.

As I see, you already have a term plan. You have not specified the coverage amount. Hope the life coverage amount is sufficient.

If you do not want to surrender, you can continue provided it is a small portion of your monthly investments.

If the premium of your investments, you must surrender or at least make it paid up.

vinithaHi Deepesh

I have a Jeevan anand Policy started in 2011.Now almost 6 years i paid ,.

The premium amount is yearly 12480.And sum assured is 3 Lakhs .and term is 25 years I can see a vested bonus of 75000 almost.I am totally confused whether to continue or surrender or to make paid up this policy .

Totally confused and sad in wasting money in wrong plan

Can you please guide me on this .?

I find investing in a PPF is better then this .

Deepesh RaghawContinue with the plan. No need to get confused.

Even I hold a Jeevan Anand policy.

Just that do not purchase such plans in the future.

AjeeshDear Sir,

you article is much much helpful. Many thanks.

I have some jeeven Anand polices (26 nos. Some of them maturing 18 th year and last on on 35 year and total cover of 30 Lakhs) and paying 27,000 quarterly. but last 1.5 year didn’t made any premium. I Have paid 4 years, but after that I found it is not profitable.

please advice what I can do with this polices.

if I make paid up, will get some return or keep idle until maturity.

Deepesh RaghawDear Ajeesh,

Please understand I am offering generic advice. It may not be the right advice in your case.

You can make them paid up. I assume since you have not paid premium for year and a half, your policies are automatically paid up.

You can check with LIC agent or local LIC branch.

I assume you have paid premium for at least 4 years in all the policies.

If you make the policies paid up, you do not have to pay any premium. Your life cover will be proportionally reduced.

Hence, you must purchase term life cover to make up the reduction in life cover.

You will get some amount back at maturity.

AjeeshThank you Sir.

Deepesh RaghawYou are welcome, Ajeesh.

Kunal NayakDear Deepesh,

Thanks for eye opener and excellent information.

I need a quick suggestion on below.

1) I am 32 year Old and I have purchased LIC Bima Gold (Money Back) policy in 2009 worth Rs,25000/- per year annual premium and I am continuing maturing in 2033.

Sum assured = 500,000/ + bonus.

2) In 2011, I purchased Jeevan Anand in 2011 worth Rs.25000/- annually maturing in 2026.

Sum assured = 350,000/ + bonus.

3) I Oct’15 I again purchased Click to Invest HDFC ULIP on Rs 50,000/- per annul to be paid quarterly. Till now 3 quarters I have paid however the Fund value is not as per expectation in Balanced Fund as well in 100%.

After reading many blogs I feel I made mistakes in rushing to purchase these policies now I want to correct all of these and now want only term plan and ELSS.

Please suggest on how to proceed.

Thanks a lot in Advance.

Kunal Nayak.

Deepesh RaghawHi Kunal,

You are welcome. Glad you liked the post.

I wouldn’t go into specifics of LIC plans. Though you can do a bit of number crunching to see what is the best course of action, making the plans paid-up would be the simplest approach. That way, you avoid throwing good money after bad.

1. Make it paid up

2. Make the plan paid up.

3. HDFC Click 2 Invest is not as evil as the other two plans. You can continue in the plan. It is a type I ULIP where the nominee gets higher of Sum Assured or Fund value in the event of demise of the policy holder. I don’t know how the fund manager will perform. Howevever, ULIPs these days are low cost products. So, you can continue. Moreover, if you do not make 5 years of continuous contribution in ULIP, then the tax benefits under Section 80C will be reversed. So, you can continue with HDFC Click 2 Invest. It is not that bad.

Just make sure you have adequate life insurance at all times.

That’s ok. Many people make such mistakes. I made the mistake myself many years back.

Kunal NayakThanks for so quick revert!

Also one more suggestion, I have now diversified my Click to Invest as well as fund management review in diversified equity 50%, Opportunity fund 30% and balanced fund 20% and waiting to see how it performs however will take a call after 3-4 years in switching funds and play with it.I believe equities will work more in 3-4 years of time.

As click to invest has very low charges hence I agreed to purchase it.

As you suggested I will get 1.5 cr plan for myself from MAX or other good brands.

Hope this will be good step.

Thanks AGAIN! 🙂

Deepesh RaghawYou are welcome, Kunal.

Yes, equity investments take time to play out. I won’t comment on the exact nature of these funds.

However, stay put (with your initial approach) and don’t think about switching funds so soon.

All ULIPs have low charges these days. I have reservations against ULIPs but it is not due to their cost structure.

In fact, a few ULIPs have even lower cost structure than mutual funds.

Kaustubh KonorWhat is the best term insurance plan one should go with?

I want 1CR cover plan for myself. Kindly suggest.

Deepesh RaghawPick up insurer you are comfortable with. There is little difference.

Make complete health disclosures while buying the plan.

Btw, you can also consider Income Replacement Term Insurance Plans.

http://www.personalfinanceplan.in/insurance/income-replacement-term-insurance-plans-you-may-need-one/

Ravi KiranHi Deepesh, its an excellent article and an eye opener for many of them who mix both insurance and investment in a single product. Of-course for me too.

I’m 26 years old and out of ignorance I have also opted for Jeevan Saral LIC plan in 2013 with an Annual premium of 36,030 with a maturity of 35 years with a sum assured of 7,50,000. Later I came to know that Term insurance is a better option for insuring the life with less premium and I took HDFC Click 2 protect term insurance with 1C sum assured.

Please let me know should I continue the LIC policy or surrender it. Till now I paid Rs. 144,120 for 4 years (36,030*4). If I’ve to continue for how many years i have to pay the premium and surrender it.

Thanks in advance for your suggestion. Have a great day

Deepesh RaghawThanks Ravi!!!

If the premium payment term is 35 years and you have paid for only 4 years, you can surrender or make the plan paid up.

No point paying any further premiums.

Ravi KiranHi Deepesh, thanks for your response.

Actually the term is for minimum 10 years. I mean if i surrender the policy after 10 years i will not be charged any additional charges. I thought of taking a loan on this policy. Is it a good decision. Please guide. Thanks!

Deepesh RaghawDidn’t get your answer.

What is the exact premium payment term?

Do you really need a loan? You won’t get much loan in any case.

JAYESHDear Mr.DEEPESH,

Thanks a lot for your insight on NEW JEEVAN ANAND.

Among all I am the one losing less amount and I am very Happy what my Financial Planner had recommended me last week to STOP paying any futher.

I just what to know that I have been paying Rs. 7700/- pm as premium. I have paid it for 11 months. What best can I do now. Please assist.

Thanks & Best Regards

Jayesh Sharma

Deepesh RaghawDear Jayesh,

If this is your first year, stop paying premium.

JAYESHDear Deepesh,

The premium which I have paid, can I get anything. Can I get it back on Maturity if I stop now paying but do not cancel the policy. Or cancelling / Stop payment of premium is same in my case, in either of the case I will not get anything.

Please assist.

Thanks & Best Regards

Jayesh Sharma

JAYESHDear Deepesh,

This what my Agent has replied.

ME:- I request you to kindly let me know the surrender value as of now, if any.

AGENT:- pls note that within 1 year policy is not having a surrender value.

ME:- If it is Zero then the premium paid till now (Rs. 85,316/-) can I get it back on Maturity.

AGENT:- in insurance we say as reduced paid up value – but the same is being not possible when the surrender value is nil.

Deepesh RaghawDear Jayesh,

If you stop right away, you won’t get anything.

It will be automatically cancelled if you do not pay premium for a few years.

Let it go.

JAYESHDear Deepesh,

Below is the reply from my Agent

ME:- I request you to kindly let me know the surrender value as of now, if any.

AGENT:- pls note that within 1 year policy is not having a surrender value.

ME:- If it is Zero then the premium paid till now (Rs. 85,316/-) can I get it back on Maturity.

AGENT:- in insurance we say as reduced paid up value – but the same is being not possible when the surrender value is nil.

PLEASE ADVICE

Thanks & Best Regards

Jayesh Sharma

Deepesh RaghawYes, you won’t get anything if you surrender before 2 or 3 years. Surrender value is Nil.

You are in the first year. Surrender the plan and forget about the money.

If you had paid for a few years, I may have asked you to make it paid up.

Let it go. It is better than paying premium for a few more years and then making it paid up.

Just one thing, tax benefits you availed in the last fiscal year will be reversed if you surrender the plan now.

JAYESHDear Deepesh,

I got your point, You mean that I should surrender the policy and forget my money rather than continuing and then making it paid up.

Thanks a ton Deepesh for the clarification, it really means a lot.

Take care and God Bless.

Thanks & Best Regards

Jayesh Sharma

JAYESHDear Deepesh,

Say I pay for 3 years, total Rs. 278,892/-, then I decide to stop paying premium and make it paid up. The paid up value will be Rs. 278,892/- or 30% of it (Rs. 83.667/-). What I will get on Maturity.

Please advice.

Thanks & Best Regards

Jayesh Sharma

Deepesh RaghawSurrender value is percentage of premiums paid. So, 30% of 287,892. If you surrender, life coverage stops.

So, it simply does not make sense and continue paying premium and surrender after 3 years.

Right now, you are losing Rs 80, 000. Then you will lose Rs 2 lacs.

Now, coming to whether you should continue and make the plan paid up later.

Paid-up is percentage of Sum Assured. So, you have paid 180 monthly installments, you pay only 36. If Sum assured was Rs 10 lac, your policy will continue with reduced Sum Assured of Rs 2 lacs (10 lacs *36/180).

With traditional plans, bonuses etc are linked to Sum Assured. So bonuses etc will go down too.

Don’t expect a return of more than 5-6%.

You are quite early into the plan. Surrender it right away. I know it is difficult to forgo your money like that but it is a good decision for the long term.

JAYESHDear Deepesh,

Thanks a lot for your analysis. It is worth knowing.

God Bless.

Best Regards

Jayesh Sharma

Deepesh RaghawYou are welcome, Jayesh.

Please do share the post with friends and family.

RamMy policy is jeevan anand. I will complete three year in jan 2017. Plocicy term year is 21 yr with 6 lac. my yearly emi is 34000.in Jan 2017 Should I surrender or paid up? please advice.

Deepesh RaghawDo not pay third premium installment. Surrender the plan right away.

mdamjadali1950@gmail.comHello Sir,

Good day!

Please give me the clarity for the below queries. Your expertise is highly obliged.

I apologize for any spelling/ writing mistakes and lengthy complicated questions in advance.

1. My father took 3 traditional life insurance policies in year 2014, i.e. Aegon Religare Flexi money back advantage insurance plan for which the premium payment term is 10 years and the policy term is 14 years. (Life insured are his sons and daughter).

My father had paid only 1st year premium (1lac + 1 lac + 50k = total 2.5 lacs for 1st year) on all the 3 policies and per this policy if at least 1st year premium is paid the policy gets paid up (usually its 3 but for this policy it is at least 1 year).

My father cannot continue further more. Some agents have told my father that if he leaves the policies as paid up, and claim the invested money in year 2028, he might not 2.5 lacs but rather the amount might go in -ve or more or less he might get 10% of 2.5 lacs. Some agents are saying that he will get his 2.5 lac + some interest + bonus if any of the 1st year. Please help me understand as we all are very confused.

2. My father took another policy form Birla sun life (life insured is me – his son) i.e. Vision life income plan with pay term of 15 years in the year 2013 and annual premium of around 1 lac. Policy term is till the age of 100 years and maturity date is 2083. Last premium due is the year 2027.

3 years premiums have been paid i.e. 2013 to 2015 and the policy can be considered as paid up. Same concern, whether down the line this 3 lac amount will get deducted with hidden charges as the agents described (fund management etc,) and we get 0 to –ve amount once the policy gets matured or will he get 3 lacs in the year 2083?

If yes, this looks too long, any suggestions on what needs to be done for this policy please?

Thank you very much Sir for answering!

Amjad.

Deepesh RaghawDear Amjad,

One thing is quite clear.

Do not pay any further premium in any of these plans. Do not throw good money after bad.

Now, the question that remains is whether you should surrender these plans or make the plans paid up.

Can you please find out the surrender value of these two plans and share with me?

mdamjadali1950@gmail.comSure I will let you know the surrender value in a day or two. But, sir my concern is since all the policies (Aegon and Birla) have acquired paid up status, are there any hidden charges like fund management etc which keeps getting deducted and we get nothing to very less amount on the date of maturity i.e. after 14-15 years? Or we will get our invested amount at least? Please let me know as few agents say we get nothing and few say we will get entire amount + bonus if any + interest etc?

Deepesh RaghawWith traditional life, calculations don’t work this way.

Everything is hidden in an opaque cost structure.

You get bonuses based on the value of your Sum Assured. For you, other charges are immaterial.

There is no guarantee that you will get back the invested amount.

Don’t focus on getting the investment amount back.

2.5 lacs today is not same as Rs 2.5 lacs 15 years later. Consider the impact of inflation.

AnonymousHello Deepesh..

I Have a money back policy of tenure 20 yrs..already paid premiums for 4yrs continuously @64k per annum..the policy is a money back policy with 5yrly money back of 20% of sum assured,which is rupees1000000 ar maturity..now am thinking to make it a paid-up policy after 5th yr,means by then i will get my frst money-back amount of rs 200000..and after then i will stop paying any premiums further…am i right?or can u suggest any else??

ni have not paid my insuarance premium since 10 years. Do i have any hope of recovering some amount ?

Deepesh RaghawDepends whether policy got surrendered or became paid up.

Check this with the insurance company. You can provide policy details and check the status.

chetan mehtaDear Deepesh,

Ur article is very useful and gives insight to the mistakes done by us in the past.

I have taken magic plan retire and enjoy at the age of 34. I am paying premium of Rs 53,000 /- p.a. and shall get Rs 3Lacs p.a after 22nd year of policy till the completion of the policy i.e. upto 65 years i.e. @ 10 years.

Is it worthwhile to pay high premium. Can I make policy paid up ? and invest in more in SIP/Mediclaim/term plan?

Kindly suggest

Thnks and regards

Chetan Mehta

Deepesh RaghawDear Chetan,

I have not gone into plan specifics.

As I understand, you will get RS 3 lacs p.a. from 56th year till 65th year.

How long have you been paying tne premium? What is the surrender value?

You look better off surrendering the plan

GauravHi, I want your advice regarding my LIC policies. I am having namely five policies for which I have paid premiums likewise – Jeevan Anand (OLD) – 4 years, Jeevan Sathi – 4 Years, Jeevan Shri – 3 Years , New Bima Gold – Money Back Policy – 7 years and a term plan for 50L along with these insurances. In total I have to pay around 1.2 lac per annum as premium for the policies. All these policies are of 20-21 tenure.

I am confused as what should be done. Should I continue paying premium for these policies for another 2 years to complete 5 years atleast which is adviced by agent to be on a safer side or should I make it paid up. Please do keep in mind before advising that I have already paid 3.5 L to LIC and if I surrender I would get a minimum value and if I leave it as paid up I would have to wait till 18 years to get the money which can be the same amount paid w/o interest or could be less.

I have also been adviced that these are the best policies of LIC and would surely give sure shot better returns than other investment instruments.

For past one year I have diverted the fund allocated for LIC premium to SIP, but somewhere deep down I am not clear about the market driven instruments and thus my decision is flickering and insisting to start the payment of premium of LIC policies again and stop SIP (as I cannot continue both). Please advice

Presently I have stopped paying premium to these policies and have started investing the same to SIPs, but would like to know whether

1) LIC would give better return with all its add ons like FAB, Bonus etc as compared to other investment instruments.

2) Is it right to pay 5 premiums for receiving good amount in the end of the policy tenure, if its in paid up status.

3) Should I surrender these policies

Deepesh RaghawDid you check with your agent why it is safe if you pay atleast 5 premiums installments?

Since all your plans are 20-21 years and you have not paid premium for more than 7 years in any of the plans, DO NOT pay any further premiums.

Now, you have two options. Whether to surrender or make the plans paid up.

For that, I will have to read all the plans in details. Something I have not done. Will answer based on other plans I have reviewed.

I think you will be better off surrendering the plans where you have paid premium for only 3-4 years.

For the plan where you have paid premium for 7 years, you can consider making it paid-up.

Continue with term plan. You must assess your life insurance requirement. Once you surrender, your total life cover will go down.

You might have to purchase additional life cover. Purchase only term life cover to bridge the deficit.

http://www.personalfinanceplan.in/insurance/which-is-the-best-term-insurance-plan-for-you/

PankajDeepesh

Good job buddy. I was looking on Internet for advise whether to make my Birla Sunlife Vision policy paid up. Somehow, I landed on your site. Read the article and all comments. My doubts were clarified. I had taken the policy without any thoughts because recommended by a friend. When I analysed the policy, I realised how low the return is. I tried to find if I can recover any amount if I surrender the policy. It was a hard decision to make losing out Rs 45000 paid as first year premium. The date of payment lapsed. I’m getting calls from Birla Sunlife to make the policy paid up at least for my own benefit. This made me doubt my decision. Your article gave me confidence in my decision. I’m right in surrendering the policy after payment of first year’s premium na?

FYI, my policy details.

Sum assured : 10.67lakh

Policy term: 25 years

Annual premium: 45000

Maturity value: 13.67 lakh approx at time of maturity guaranteed, plus an annual pension of something between 50000 to 1 lakh claimed till death plus 10.67(sum assured) at death to nominee.

Accidental death rider: 5 lakhs

What would you suggest?

Deepesh RaghawHi Pankaj,

You are welcome.

Since you have paid premium for just one year, let the policy lapse.

Surrender the plan.

Purchase a pure term plan for your life insurance needs.

Suggest you go through the following post too.

http://www.personalfinanceplan.in/insurance/which-is-the-best-term-insurance-plan-for-you/

Vijay KangraHi Deepesh,

I have LIC jeevan anand having total of 15 policies for 30 years maturing at the age of 55 to 70 years of mine.

Total premium for a year is 41182, i pay it hly (20591 x 2), SA of each policy is 1L with premium paying term for each policy as 29, 30, 31…. years.

Policy started-March 2013; Total premiums made 7 HLY (144137), next prem due in Sep-16.

I have completed 3.5 years of the policy.

Which is better option surrender/paid up?

What is the process to surrender the policy or make it paid up?

I have taken term insurance of 50L.

Kindly advice.

Vijay

Deepesh RaghawHi Vijay,

3.5 years out of 30.

Without going into numbers, suggest you surrender the plan.

Do not pay any further premiums.

Abhishez24@gmail.comHi Deepesh,

I read your your artlicles & find it to a knowledge bank for people like me.I had taken a Jeevan Anand policy in 2013 paying a yearly premium of 69,483.00 .The maturity date of the policy is in the year 2028.The insurance agent promised me a higher amount while purchasing the policy & now I realize that the maturity amount after 16 years (2028) is only 1745000.00 which is much lesser that the amount promised.I went back to the insurance agent & he tells me that you can surrender the policy post paying all the 16 yearly premiums till 2028 & receiving the maturity amount of 1745000.00 & you will inturn get 5L to 6L as your surrender amount as Jeewan Anand gives you a Life Coverage Insurance of 10Lakhs which you are claimimg.

I do not see any such information mentioned on the policy, hence would need your help in this regard.

Regards,

Abhishek

Deepesh RaghawDear Abhishek,

LIC announces bonus every year which is not fixed. However, as I understand, LIC tries to keep bonus amount constant.

Hence, nobody can say with certainty in a participating plan what the maturity amount will be.

I don’t know how you arrived at the maturity amount.

Agents typically rosy projections at the time of sales pitch.

I don’t know what agent means when he says that you can surrender the policy after paying all premiums. It appears your agent is misleading you.

As I understand, you have paid 4 out of 16 premiums.

You have any idea about the current surrender value? Find it out from the agent.

Without going into calculations, making the plan paid-up might not be a bad idea. Do not pay any further premiums.

AnandDear Deepesh ,

Thanks a million for the insights on the traditional insurance plans.

Unfortunately purchased Jeevan Anand (old policy) with 16,000/- annual premium with sum assured of 3L, premium paying term 21 yrs. I purchased it in 2006 and have paid 10 yrs premium.

Since the premium was not much and it was deducted through ECS , i ddi not bother much about this policy. But after reading your thought-provoking opinion on these kind of policies , i feel i should stop paying this policy.

After reading this it appears if surrender it , i will get less than 50K. i feel i should stop paing this policy and let it become paid up .

Please suggest .

thank you

warmest regards

Anand

Deepesh RaghawDear Anand,

If you have already paid for 10 years in a 21 year policy, suggest you continue with plan. Do not surrender or make the plan paid up.

Consider the plan as part of your debt portfolio.

AnonymousSure.

thanks for the reply.

Anand

LakshmiDear sir,

I have taken jeevan anand in 2007 for a sum assured 3 lakhs.for 16years. But i have paid for 2 yrs only. Please let me know how to continue oresle how to take my money

Deepesh RaghawDear Lakshmi,

Your policy would already become paid-up or got surrendered.

Please check the status with your agent or nearest LIC branch.

AnonymousThank u

Abraham JosephDear Sir

Im 28 yrs. I have purchased lic Jeevan Anand for a premium of 6800 and lic money back policy for a premium of 7380. Both for 21 and 20 yrs . So paying almost 15000 rs quarterly. Alredady paid 5 premiums. Now I feel its not beneficial and affordable. What should I do. Please advise. I m planning to drop the plans. Is that a wise decision or not. Please advise me on this

Deepesh RaghawDear Abraham,

I wouldn’t go into numbers. Exact decision can be conveyed if you do spreadsheet analysis.

As I understand, you have already paid 5 premiums out of 20/21 installments.

If you are not comfortable paying such high premium, you can make the plans paid up.

If you surrender the plan or make the plan paid-up, do purchase a term life cover to bridge the insurance shortfall.

http://www.personalfinanceplan.in/insurance/which-is-the-best-term-insurance-plan-for-you/

Anonymous5 premium I mean is only 5 times. ie around 75000 Rs. The plan is of 20 and 21 yrs respectively. So for making it to paid up I must continue 2 more years ryt?

Deepesh RaghawDid you check surrender value withe your agent?

AshwaniHi sir. This was an eye opener. Thanks a lot. Now pls help me sir. I bought jeewan Anand policy for 25 years. 26000 is premium for 600000 cover. 6 premiums already paid. Should I surrender,continue or paid up.

AshwaniI also have a term insurance of 1 Cr cover

Deepesh RaghawHi Ashwani,

Thanks!!!

What is the surrender value?

Without going into the maths, paid up seems like a good option.

AnonymousThanks for the reply. Approx surrender value is 95000. What to do for making it paid up?

Deepesh RaghawSurrender the plan and forget about it. You can make it paid but it will unnecessarily add to the clutter in your portfolio.

AshwaniThanks

HimanshuHi Deepesh,

Awesome article, certainly an eye opener…

I relooked my insurance portfolio. I have 4 LIC policies as below and NO Term Insurance yet…

Policy 1: Komal Jeevan (2008), Term-18 years, paying since 9 years, premium – 14000

Policy 2: Money back (2005), Term-25, Paying since 12 years, premium – 10,315

Policy 3: Jeevan Anand (2009), Term – 21, Paying since 8 years, Premium – 15000

Policy 4: Jeevan Surbhi (2006), Term-18, Paying since 10 years, premium – 24000.

Total SA: 10,00,000, Total Premium paid till date: ~6,00,000.

Can you please suggest me whether to Surrender or Paid up.

Also, planning to buy Term-I, is it worth spending almost double for ‘Critical Illness rider’ (talking about ICICI/HDFC….)

Regards,

Himanshu

Deepesh RaghawThanks Himanshu.

When it comes to personal finance, there may not be any crisp answers.

You must at least do the maths yourself.

In my opinion (without looking at actual numbers), it may make more sense to continue these plans since the plans are quite old.

It is a different matter if the annual premium is pinching your pocket and compromising other investments.

I didn’t get your question about term plans? Can you please elaborate with exact numbers?

HimanshuHi Deepesh, thanks for the quick answer.

Regarding term plans, I was considering ICICI with Critical Illness as rider. But the rider increases the premium by almost Rs. 8,000 vs plain Vanilla term insurance which costs around Rs. 15000….

My question is, do you think Critical Illness rider is worth Rs. 8000 or you would rather suggest to go for Family Health Insurance (which may cost around Rs. 15000 but covers all 4 family members)…

Regards,

Himanshu

Deepesh RaghawHi Himanshu,

If you do not have health insurance yet, purchase a family floater plan first.

Critical illness plan is secondary.

Suggest you go through the following posts.

http://www.personalfinanceplan.in/insurance/critical-illness-insurance-plan-should-you-buy/

http://www.personalfinanceplan.in/insurance/8-tips-to-reduce-health-insurance-premium/

Request you to share these posts on your social media pages.

HimanshuI will go through those.

Thank you so much for your kind help!!

GurmeetHi Deepesh,

Thank you so much for putting this up; as people like me generally don’t have any idea and get into the trap very easily.

I opted for new jeevan anand policy for premium term of 25 years in Feb 2016. I have already paid around 8 (monthly) installments of rupees 2100/ each-. that means i have already shelled out around Rs. 17,000/-.

I did go through your article about considering paid up or surrender but still i could not decide what to do

please suggest, shall i surrender or wait for 3 years and then get it paid up?

Regards

Deepesh RaghawHi Gurmeet,

You have not even paid premium for one year.

Merely from returns perspective, it may make better sense to surrender.

Please do purchase a term plan to bridge the insurance shortfall.

ChandanHi Deepest,

I have a New jeevan anand policy. Yearly premium is 35k for 21 yrs. Sum assured is 5lacs. I have paid the premium for 2 years. All I understood from the above discussion is that I should discontinue it right away. Is that right? or should I keep it as a paid up policy. Please advise.

In case i discontinue what should I do with 35k amount? I want to invest it in a term policy and in MFs. so please suggest good ones for these options.

Deepesh RaghawDear Chandan,

You will have to work out the maths yourself.

Since you have paid only two premiums (out of 21), the outcome will likely be surrender.

However, please work out the numbers yourself.

Yes, life insurance gap needs to be bridged. You can go through the following post.

http://www.personalfinanceplan.in/insurance/which-is-the-best-term-insurance-plan-for-you/

ChandanHi Deepesh, sorry about the typo in the name.

Please help.

Regards,

Chandan

GirishHi sir. i just go through your blog which helped me for writing you about my policy Thanks a lot. pls help me sir. I bought jeewan Anand policy for 25 years. Rs. 1,04000/- is annual premium for 20 lacs cover. i have paid premium for 2 years and 3rd year is going to complete in few months. Should I surrender,continue or paid up.Please kindly advise suggest the path. thanking you.

Deepesh RaghawDear Girish,

You have to do maths for yourself.

Such questions cannot be answered in isolation.

Mathematically, the answer is likely to be surrender.

But Financial planning is much more than excel modelling.

James SamuelI have an LIC JEEVAN ANKUR. The annual premium comes to Rs 24000. Have paid for 3 years. Want to discontinue. Shall I make it paid up or surrender it. How much surrender value will it procure?

Deepesh RaghawDear James,

I have not read policy terms.

Is this one of the plans where life insurance is on the life of the child?

AnonymousDeepesh,

The risk cover under this plan is on the parent and the named child is the nominee under the plan. The policy term shall be based on the age at maturity of the child.

NiravDear Deepesh, it’s a real worthy blog. Am too in a bit of dilemma, need help to decide.

I purchased a Jeevan saral policy with half yearly premium of rs 56835/- in July 2009, with PPT-15 yrs. Maturity sum assured – 1746900 and death benefit – 2250000. Should I continue paying premiums or surrender the policy and invest in the amt in Mutual funds etc. SV – 687181/-. Have paid 852525/- so far. Maturity of policy is 28-July-2024. Kindly advise.

SomnaoI don’t know why these plans are created basically if they are so worthless.

Anyways. good information. I have already purchased Lic jeevan Anand. Will think of surrender

Deepesh RaghawIt also points to what customers are willing to purchase.

Btw, if the policy is old, you can even continue.

gyanendra singhsir i have a endowment assurance plan of 21yrs with sum assured 1100000 and extra accidental cover of 1100000 with halfyearly premium 25725. i have paid 8 premiums uptill now and i want to surrender. pls tell whether it is right decision or not

gyanendra singhplease reply

Deepesh RaghawDear Gyandendra,

Without going into plan specifics, it may be a good choice to continue the plan till maturity.

You have already paid premium for 8 out of 21 years. Consider the plan part of your debt portfolio.

GYANENDRA SINGHSir, i wanted to know whether the maturity amount i would get is ok after investing this much premium for 21yrs or i have indulge myself in a wrong investment. is there some better option other than this

Deepesh RaghawGyandendra,

Please don’t get confused.

Stick with the plan.

AbhishekHi Deepesh,

The article you wrote is very nice and helpful. Can you please mail me the excel sheet of the table you used in the article? I’m considering surrendering my policy and would like to use the information in calculating numbers to arrive at final decision. I’ve LIC Jeevan Mitra triple cover endowment plan. I’m paying a premium of Rs 31,000 per year for an insurance cover of Rs 24 Lacs and have paid 6 of 30 installments. My email id is “bmyfrnd.friend@gmail.com”

Thanks!

Abhishek

Deepesh RaghawHi Abhishek,

Thanks.

My excel sheets are usually quite hotch-potch and usually for own consumption.

Anyways, I prepared for a different plan. In your case, you can simply talk to your agent and find out the surrender and paid up values.

That should make the task (decision making) quite easier.

Lochan BagulHi Deepesh,

I have 2 Lic plans: 1. Endowment plan for 21 years. paid 44533/- premium per annum for 4 years (since 2012). next due date is Jan 2017. Maturity value is 1365000. should I surrender or paid up?

2. Jeevan Anand: premium 45000. term 21 years. have paid 3 installments. sum assured 1000000. Should I surrender or paid up?

Please reply.

Regards,

Lochan Bagul

Deepesh RaghawHi Lochan,

Not every decision in life is a financial decision (and can be worked out in an excel sheet). Even though an excel sheet analysis may throw up a different decision, you need to see what you are comfortable with.

You may as well continue with these plans. The fact that you hold a couple of plans already tells a bit about your comfort with investments.

However, you can avoid purchasing more such plans in the future.

Anil ShettyHi sir,I have a Jeevan shri policy of 2001 of 500000 ,my term of payment will get over this year and I will get money back after 10 years, should I surrender the policy now or wait for 10 years to get my money

Thanks

Deepesh RaghawDear Anil,

I have not gone into policy features and can not back my answer with any kind of mathematical analysis.

However, I suggest you continue the plan. You have paid all the premium installments.

sandipHi Deepesh,

Thanks for the excellent write up; I also read your article on traditional plans. You have done a fantastic job and I wish insurance agents & companies were at least half as straight forward and clear as you are. I have paid 13 premiums, each of Rs 20590,for my Jeevan Anand of 28 year term. After reading your articles, I think the best option for me is to make it paid up, which I am planning to do from next year (as I’ve already paid this year’s premium). I think I’ll get roughly 2.3 lakh paid up SA + 2.9lakh vested bonus at term. Please let me know if you think surrender is better.

Once again, thank you so much.

Deepesh RaghawDear Sandip,

Thanks for the kind words.

Commissions and targets may cloud judgement (not that this happens with all the agents).

If you have paid 13 premium installments (out of 28), continuing till maturity may not be a bad choice.

Consider this plan as part of your debt portfolio.

josephCommencement Date 25/02/2015

Sum Assured (Rs.) 500,000

Plan New Jeevan Anand (T.No. 815)

Policy Term 16 ( Premium payment term : 16)

Premium (Rs.) 38,352.00 payable Yearly

Next Premium Due 25/02/2017

Dear Deepesh,

I appreciate your valuable time. I have paid 2 premiums. From all the above comments, what I understand is forget my plan and do not pay anymore; and go for term plan. It is not easy to accept that advice. Is it advisable to pay the premium for the third year and then go for surrendering?

Deepesh RaghawDear Joseph,

What I have presented is a mathematical analysis with a number of assumptions. You need to check calculations in your case.

Moreover, Life can not be planned out on an excel sheet.

Consider your other investments, life insurance plans and type of investor you are and then make a decision.

It is easy to get influenced by any analysis but you need to see this in your context.

Who knows, for you, continuing may be a good choice.

All I will say is that if you want to surrender, surrender now (rather than surrendering after paying one more premium).

ShaileshHi Deepesh,

Thanks for giving knowledge on traditional insurance plans with its pros and cons. Many salaried people end ups listening to these agents who are out to shell out hard-earned money in the name of tax savings.

I have a query which you help me to resolve.

2 LIC Jeevan Saral Policy.

Pr1. 7656.00 Qly Pr2. 6065 Hly

SA1. 6.25L SA2.2.5L

6yr completed

Also, have 1 LIC Jeevan Anand

Pr.7991.00 Hly, SA.3L

6yr completed.

Going through the article I have made my mind to make all 3 LIC policies as Paid-Up.

Also, I already have term cover for 1Cr. taken 2 yr running and invested in PPF apart from my salary deduction.

Kindly do let me know your expert advice.

Deepesh RaghawThanks Shailesh!!!

Please share this post with your friends on Facebook, Twitter and Whatsapp.

Unless premium is not affordable, continuing the policies till maturity may not be a bad idea. You have already paid premium for 6 years.

But yes, you need to purchase additional life cover.

SekarI took Jeevan Anand Policy for 21 year (policy start date Mar 2015) with a annual premium of 1,30,000/- for 25Lac sum assured. I have paid premium for 5 yrs. I would like to surrender, Can you suggest the benefit/loss if I keep it paid up.

Deepesh RaghawDear Sekar,

Please contact your agent or the nearest LIC Branch.

SekarThanks Deepesh

RaviSir..I had taken Jeevan Anand 4 lakhs policy in 2011 and paid premium for 6 years out of 21 years. Pls suggest course of action…Thanq…

RaviMy yearly premium is RS 21534 and six years I paid.

Deepesh RaghawSuggest you continue the plan.

RaviThank you sir.

SameerHI Deepak,

Is there any term insurance plan for family ??

Deepesh RaghawHi Sameer,

It makes no sense to purchase life cover for kids.

There are limited terms which can cover you and your spouse.

You will have to see if such plans make sense for you.

Suggest you go through the following post.

http://www.personalfinanceplan.in/insurance/all-you-need-to-know-about-joint-life-insurance-policies/

Raja pandianHi Deepash

Raja pandianHi Deepash,

Thanks for the sharing the info and knowledge about surrendering/paidup.

I have 2 policies

1)

Jeevan saral (35 years)

SA 7,50,000

Premium 36330 YLY (18,165 HLY)

started 2008

i am completing 10 years on next due at nov 2017

Shall i surrender after 10 year completion or make it as paidup ?

(LA is eligible only after 10th year)

2.New bima gold (16 years)

SA 10,00,000

Premium 53035 YLY

Started 2012

Till now i have paid 5 premium (53035 * 5 = 265175) and received 1,50,000 as money back @ 4th year

Due to money constraint now this amount looks huge for me and after reading your blog i felt i wasted on investing on wrong plan.

Shall i surrender it now or i have make it as paidup?

Need your suggestion. Thanks in advance

Deepesh RaghawHi Raja,

Difficult for me to comment.

I have not reviewed either Jeevan Saral or Bima Gold.

As I see, you are NOT making any investments apart from these LIC policies.

You can make one of the plans paid up.

Sometimes, in case of cash flow pressure, investors squeeze their expenses and somehow manage to keep making investments. If you can do that, nothing like that.

Raja pandianThanks for your sugesstion.

Yes i dont have any other investment other than LIC except EPF.

Can i go for Sip on Elss instead of investing more on bima gold.

Whats your sugesstion on elss, which one will suit for me.

Pradeep VenkateshHI Deepesh,

I have bought a LIC Jeevan Anand plan in August 2013 for a sum assured of 8Lakhs. I am paying a premium of Rs. 44084 yearly. Policy Tenure is for 21 years and I have already paid 4 Yearly installments .

Please suggest should I surrender or make this policy Paid up?

I have checked the surrender value and it is 30% excluding first year premium.

Thanks

Pradeep

Deepesh RaghawHi Pradeep,

Why did you purchase the plan?

AnonymousHi Deepesh,

I wanted to build some corpus for my retirement and also a risk cover. Hence purchased this plan. I was not aware that the returns will be around 4-5% and also the agent was my neighbor. After reading your article, seems I have not done enough research before purchasing this policy. However for my risk cover, I have taken a term insurance for 50L last year. I have already invested in MF through SIP and now I wanted to divert this premium amount in to equities where I can get more returns which can help me in building good corpus for my retirement.

Regards,

Pradeep

Deepesh RaghawHi Pradeep,

I wouldn’t go into mathematics of it.

If your annual premium crowds out your other investments, then you should surrender or make it paid up.

Otherwise, I suggest you continue.

AnonymousHi Deepesh,

I am paying Rs. 5000/month for LIC(2.5K for five Jeevan anand and 2.5K for five Jeevan saral policy)

I paid premium for almost 40 months ie 3years 4 months, Since i understood now that investment and insurance should not be mingled, i decided to either surrender or paid up, which option is best for me.

Deepesh RaghawWouldn’t go into numbers.

Not every financial decision is mathematical.

Are you able to make other investments apart from these policies?

AnilHi Deepesh

Thanks for informative post. It’s really helpful.

Do we get cash back amount for Paid-up LIC policies?

I have been paying premiums for some cash back policies of LIC since last 5.5 years.

Thanks,

Anil

Deepesh RaghawThanks Anil.

If you liked the post, your friends may like it too. Please share the post with your friends.

Typically, in case of paid-up policies,you get the money at the time of maturity.

Have you made the policies paid up?

AnilHi Deepesh,

No I have not made it Paid Up yet, have applied for LIC e-term policy online and will get it in next couple of weeks.

One LIC person told me that there will not be much different between the surrender amount and maturity amount of Paid Up policy.

So once I get new term policy, I’ll be surrendering all my cashback LIC policies and shifting those investments to ELSS. Anyways now income Tax is reduced to 5% from 10% for less than 5L salary. So Long term wealth creation is important for me than Tax savings.

Your view please.

Deepesh RaghawHi Anil,

You can surrender these policies after working out the numbers. If you have paid premium for many years, it may actually make sense to continue.

Leave it to you.

Clearly, If you must discontinue AND if the difference between paid up and surrender value is not big, you can considering surrendering.

Btw, did the advice to surrender came from an LIC agent? If that’s the case, do not put this money in any other traditional plan.

From what I have seen, people stop these policies after going through posts like this but do not make any other investments either. And that is a problem. By trying to be over-smart, they stop the only investments they were making. Hope you don’t do that.

Good that you have purchased a term plan already to make up for the loss of life cover.

AnilI mean a cash back as per reduced sum assured of paid up policy.

S.KumarHello Deepesh,

I invested in jeevan anand policy in 2011 for a 15 year term. Annual premium is 23155 and I paid 6 installment. Sum assured is 300000. So according to you which route should I take. Surrender, Paid up or continue with the policy.

Further I also took one jeevan mitra policy for 15 yrs term with triple cover on surrender value. Annual Premium is 13622 and I have paid 6 installment. Sum assured is 2 lakh. So what should I do with this policy.

Thanks n regards

S.kumar

Deepesh RaghawHi,

Can I ask you a simple question?

What confuses you?

NarayananHello Deepesh,

Thanks for the article and giving an insight into the traditional plans.

After going through the article, I am considering to make few of my LIC policies as paid-up/surrender.

The details are as below and request your inputs.

1) I have recently taken (an year back) Term plan for 1 crore and a health insurance for 15lacs/year

2) I purchased few LIC policies in August 2010 as below

LIC Plan SA Premium DOM

(Yearly)

=====================================================================================

a) Marriage/Educational Annuity Plan (T No. 90) 250,000 16,390 8/2025

b) Marriage/Educational Annuity Plan (T No. 90) 600,000 41,868 8/2024

c) Marriage/Educational Annuity Plan (T No. 90) 220,000 13,378 8/2026

d) Marriage/Educational Annuity Plan (T No. 90) 200,000 11,318 8/2027

e) Marriage/Educational Annuity Plan (T No. 90) 1,650,000 87,288 8/2028

f) Marriage/Educational Annuity Plan (T No. 90) 200,000 9,911 8/2029

g) Marriage/Educational Annuity Plan (T No. 90) 180,000 8,379 8/2030

h) Marriage/Educational Annuity Plan (T No. 90) 150,000 6,604 8/2031

i) Marriage/Educational Annuity Plan (T No. 90) 1,050,000 43,783 8/2032

j) Jeevan Anand 900,000 42,058 8/2033

k) Jeevan Mitra with Triple Cover 800,000 38,427 8/2037

l) Endowment Assurance 750,000 24,130 8/2041

m) Endowment Assurance 700,000 20,553 8/2045

I have been paying premium for the past 7 years (2010 to 2016) and currently thinking of making few of the policies as paid-up/surrender. Since all the policies cannot be closed, I feel that last few policies from h) to m) can be surrendered considering that I have paid premium for < 35% of the total tenure for these policies.

Therefore,

– Kindly let me know if my approach is correct (that is surrendering h) to m)? If not, please suggest your opinion.

– Also, based on your experience, would it better to make these policies as paid-up or surrender?

– Any other inputs you have, please let me know.

Thanks

Deepesh RaghawHi Narayan,

How much of your annual investment goes towards insurance premium of the aforementioned policies?

NarayananHello Deepesh,

The above mentioned policies constitute 90% of my investment portfolio.

I am now looking to diversifying by moving to ‘Equities’ and thereby thinking to surrender or paid-up for the few policies h) to m).

An additional information:

– I have made a brief calculation of the premium paid for policies h) to m) and it is ~12 lacs (2010 to 2016)

– However if I go for surrender (having a conservative surrender value in the range of 25% to 35%), I will be getting ~7lacs (have also asked my LIC agent to confirm this as well) and with this money invest for long term to get better returns that policies h) to m),

So considering that this is the surrender value which I will get, I would like to take your opinion if:

– My approach is correct (that is surrendering h) to m)? If not, please suggest your opinion (I will be losing ~5 lacs)

– Also, would it better to make these policies as paid-up or surrender?

– Any other inputs you want to suggest that will benefit me,

Thanks

Deepesh RaghawHi Narayan,

You didn’t answer my question.

Do you make any investments apart from these insurance premiums?

What percentage is this insurance premium out of your overall annual investments?

What I want to understand is if insurance is crowding out your other investments.

NarayananHi Deepesh,

Sorry – may be I misunderstood your question earlier.

I do not have any other insurance premiums other than the ones stated above.

These insurance cover ~90% of overall annual investments.

Yes, you are right. My insurance premiums are crowding other investments. So I want to stop/surrender some of them diversify.

– But whether I need to go for paid-up or surrender (for some – h) to m)) is my query?

– Kindly share your thoughts

Thanks

Deepesh RaghawHi Narayan,

You will have to do a bit of maths. Find out the surrender value or paid-up value of your policies.

If surrender value compounded at the rate of 8% exceeds the paid-up value at maturity, surrender the plan or else make it paid up.

i.e. surrender value *(1.08)^(maturity year-2017) > paid-up value at maturity, surrender the plan. Or else make the plan paid up.

Surrender a few plans so that you have say 50-50 allocation to LIC premium and equity investments.

Ramana Reddy PHello Deepesh,

Thanking you first for your kind for all the queries.

I am Ramana. and I have one LIC Jeevan Anand Policy with Term 21 years and Amount : 24906/- per one installment/yearly and Till now I have paid for 4 years and realized from your blog that my returns will be low if I continue paying LIC from now. Could you please suggest me, Paid up is better or Surrender is best for my LIC Policy. If you ask me to Surrender, where can i invest the surrender amount Equity Mutual funds/PPF/Stocks/ELSS funds to beat the surrender value ?

Thanks & Regards,

Ramana Reddy P

Deepesh RaghawYou are welcome, Ramana. Please share the post with your friends too.

Do you have any other life insurance plan apart from this?

Do you invest in other products too or this is your only investment?

Ramana Reddy PHi Deepesh,

Sure. You blog is very helpful. I will let my friends know about this.

I don’t have any other Insurance. I will take an term insurance. I am investing in Equity Mutual Funds from past 9 months as SIP mode and PPF. Soon, I would like to start ELSS. I will make use the premium amount 24906/- of LIC from now into Term Insurance and ELSS funds. Could you please suggest me now. Surrender or Paid up ?

Also, I have another question. Our family of 4 members have Basic Individual (not floater) Health Insurance with Sum Insured 5 lac each. Should we required take Critical Insurance & Accidental Insurance as a Family Floater ?

My Family Details :

Father – Age – 48 yrs

Mother – Age – 43 yrs

Me – Age – 29 yrs

Sister – Age – 27 yrs

Could you please suggest now.

Thanks & Regards,

Ramana Reddy.P

Deepesh RaghawI suggest you continue the plan.

Ramana Reddy PDear Deepesh,

As you know Sum Insured will be 10 lac for premium 24906/- which is low. What if I start paying Term Insurance. What you suggest ? Because premium for LIC is high and SI is low. Do I incur loss if I make it Paid up and start investing in ELSS ?

Thank you,

Ramana Reddy P

Deepesh RaghawHi Ramana,

Your decision to purchase term life cover should be independent of surrendering the Jeevan Anand plan.

Therefore, you shold

You have raised pertinent points. However, financial planning is not about finding the most optimal solution.

It is about finding solutions that you can easily understand and implement. After reading blog posts like these, you may be inclined towards finding the best solution. However, it does not work this way.

I do not want you to be in a situation where you surrender the plan and do not purchase anything else either. I am sure this happens with a lot of people.

I suggest you purchase a term insurance plan first and then we have this discussion.

Btw, is the annual premium for LIC plan crowding out other investments?

AnonymousHi Deepesh,

I have purchased a term insurance plan which started coverage from 31-MAY-2017 till 40 yrs from now.

Yes, My LIC plan is crowding out other investments like ELSS, mutual and PPF.

Could you please help me now to take decision on my LIC Plan.

Thanks,

Ramana Reddy P

Ramana Reddy PHi Deepesh,

I have purchased a term insurance plan which started coverage from 31-MAY-2017 till 40 yrs from now.

Yes, My LIC plan is crowding out other investments like ELSS, mutual and PPF.

Could you please help me now to take decision on my LIC Plan.

Thanks,

Ramana Reddy P

sushil kumarHello Deepesh,

I have a Jeevan Anand Policy, term 21 years, installment is 13325 per quarter, I have paid 10 installments. Now i have started investing in mutual funds and they are fetching good return. This LIC seems worthless compared to mutual funds. What shall I do now? I could surrender it after two installments or make it paid up, Surrender value is 30%. I have other better life cover plans so I don’t need it for life cover. What would you do if you were at my place. Policy is already bought so don’t say you would not buy such a policy in the first place 🙂

Deepesh RaghawHi Sushil,

If your LIC premium is not crowding out your other investments, you can continue. Consider LIC policies as part of your debt portfolio.

This is not the best approach but something most are comfortable with.

Do not purchase such plans in the future.

VinodHello Deepesh,

Thanks for this article. I am 29 years old and having 2 Lic policies:

1. Jeevan Anand: term 21 years, annual premium is ₹15600.00, 5 installments paid.

2. Lic New jeevan anand: term 32 years, annual premium is ₹33600.00. Paid 2 installments.

Please guide me, what should I do. I’m thinking to invest using SIP along with term insurance instead of paying lic premiums.

Should I pay 3rd premium for new jeevan anand to get paid up value? Please give your valuable advice. Thanks a ton in advance.

Deepesh RaghawHi Vinod,

You are welcome. Please share the post with your friends.

Do you have a term insurance plan?

These annual premiums are what percentage of your overall annual investment?

VinodThanks Deepesh for replying.

Definitely I will share this with my friends to be aware before investing in such plans.

I don’t have term plan yet but I’m investing in PPF and RD from last year. I’m thinking to invest in SIP but not started yet. I’m not familiar with mutual funds investments

These Lic premiums are around 40% of my annual investments.

I don’t know how agent convinced me to buy policy of 32 years long term which now I feel is unnecessary. But after realizing the fact I asked him for any option to at least reduce term if exit is not possible. He said term can be reduced. I am really not sure what to do. Should I reduce term and stick to the plan or forget the 2 years paid premium. Please help me to overcome the situation. Thanks a lot again.

Deepesh RaghawHi Vinod,

My limited concern with stopping such plans is that many of us don’t compensate by purchasing a term plan. In a way, we end up giving up the limited life cover we had. And this is what worries when anyone asks me whether they should surrender the plan.

You can not reduce term of an insurance plan.

Mathematics would suggest that you surrender the 32 year plan. You can continue with 21 year plan (you can make it paid up if you don’t want to continue).

However, use the money that you save by investing elsewhere and purchasing a term plan.

Suggest you consult a SEBI Registered Investment Adviser if you need help with the investments.

RahulHello Deepesh,

I have taken Jeevan anand policy for 21 term years. Sum assured is 10,00,000 Rs.

I am paying 51,508 yearly. I have paid initial 2 installments (1,02,016 Rs.). I have made up my mind to surrender it only doubt should i pay one more installment and then surrender it, so i will get some of the amount back.

If i surrender now i will loose 1,02,016 now, after paying third installment and then surrendering i will lose 84,000.(i have used online calculator to get this number link is here: http://www.investobite.com/surrender-value-calculator/new-jeevan-anand-815.html)

So, what should i do??

Pay third one or just lose 1 lakh now. (After knowing all this, i don’t want to pay a dime towards this policy)

Of course ill be buying a term insurance. 🙂

Deepesh RaghawHi Rahul,

If the data shared is correct,

If you surrender now, you lose everything. Input=Rs 1.02 lacs output= Nil

If you surrender after 3 years, input= Rs 1.53 lacs output:Rs 69,000

With this surrender after 1 year looks a good choice.

Not much to add.

However, notice all the Ifs. What if the calculation on the website is not correct.

VimalI am Vimal. and I have taken 21 years term LIC Jeevan Anand Policy and Amount : 24906/- per one installment/yearly with Sum Assured 5 lakhs and Till now I have paid for 4 years and realized that my returns will be low if I continue paying LIC from now. I have a Term Insurance policy now with SA 90 lakhs now. Now I don’t want to pay LIC Installments. Could you please suggest me whether Paid up is better or Surrender is best for my LIC Policy. My Other Investments are crowding due to LIC Installments. If you ask me to Surrender, where can i invest the surrender amount Equity Mutual funds/PPF/Stocks/ELSS funds to beat the surrender value or I can stop Installments and make it Paid up?

Deepesh RaghawHi Vimal,

You will have to work out the numbers yourself. Find out the surrender value from your agent and then you can do a simple scenario analysis on an excel sheet.

Sudipto SinhaHello Sir,

I am 30 years old and having 4 Insurance policies:

1. Jeevan Anand: term 21 years, annual premium is ₹50580, 8 annual installments paid.

2. Jeevan Mitra: term 26 years, annual premium is ₹10262. 7 annual installments paid.

3. Endowment Assurance Policy: term 27 years, annual premium is ₹3484. 6 annual installments paid.

4. UTI ULIP: term: 15 yrs, monthly sip amount is ₹2000, Second year running.

Please guide me on which insurance policies i should make paid up to free money for availing house loan.

Also do I need additional Term Insurance or the ULIP will be sufficient for me. Pls advise.

Deepesh RaghawDear Sudipto,

How are you life insurance polices and home loan linked?

Sudipto SinhaSir thanks for your response. It is not linked. I want to avail a home loan & so want to cut down on my expenses & non-profitable policies that I had to do because of relations. So pls guide on how do I streamline my investments.

Deepesh RaghawHi Sudipto,

You need to assess your life cover requirement. I believe your existing insurance is likely to be on the lower side.

You can purchase life cover to bridge the gap.

Your policies are quite old.

See, just because you can surrender or make the policies paid-up, does not mean you should surrender or make those paid-up.

If you have to surrender, surrender the newer policies first (except ULIP). You can continue the older policies.

If you stop ULIP, your tax benefits will be reversed too.

Suggest you talk to a good financial advisor. He/she will be able to take a holistic view.

Piyush C. ParmarHello Deepesh,

Thanks for wonderful information!!

I purchased 4 LIC Policies in 2006 with annual total premium of 45168. One of them will be matured in year 2022, second in 2026, third in 2031 and forth in 2036.

I have been paying premium till today, however now I don’t want to pay any further.

Kindly suggest if surrender or paid up is correct option after 10 years of premium payment.

Thanks & Regards,

Piyush C. Parmar

Deepesh RaghawYou are welcome, Piyush.

Will appreciate if you could share this information with your friends too.

Suggest you continue with these plans till maturity.

Just that do not invest in any more traditional life insurance plans.

CHAITHRA SURENDRAI have purchased New Jeevan Anand in 2016. I am 32 yrs old. Basic sum assured is 10lakhs and policy term is 21yrs. I read ur blog and want to make the policy paid up. Please suggest how to do it.

Deepesh RaghawHi Chaithra,

Policy can be made paid-up only after paying premium for 3 years.

CHAITHRA SURENDRAI am 32 years old. I have done SIP of Rs. 2000 in ICICI PRUDENTIAL VALUE DISCOVERY FUND in Aug 2016. I plan to invest in one large cap fund in Aug 2017….an SIP of Rs. 1000. Which large cap fund do I choose?? SBI BLUECHIP or BIRLA SUNLIFE EQUITY for long term return with low risk?

Deepesh RaghawHi Chaithra,

Am sorry I can’t comment on specific funds.

Risk will always be there with equity funds.

karni singhhello sir,

I am 45, and have Max life insurance policy – Whole Life partner plus, 20 year pay policy in may 2009, premium 10,600/-.

I am not interested to continue it and want to surrender it. Surrender value now – 41,432/-,

so please suggest- it is right or wrong?

Deepesh RaghawHi Karni.

When does the policy mature?

subbaraoDear Deepesh,

Your blog is really helpful. Thanks for the information and eye opener for many of us.

My policy term is 75 yrs and premium term is 40 years. Premium amount is 46K and sum assured is 15 lacs

Till now i have paid 4 premiums . I would like to go for paid-up option since premium term is too long. Please suggest. If i go for paid-up option when will i get the premium paid till now and how much amount i will get ?

Thanks & Regards,

Subbarao

Deepesh RaghawThanks Subbarao.

Will really appreciate if you could share with your friends too.

Guess you have purchased a whole life policy.

Frankly, it is better to surrender (and get whatever you get). With paid-up, you are unlikely to be around to see the money at maturity.

sachin kDear Deepesh,

Thanks for eye opener and excellent information.

I need a quick suggestion on below.

1) I am 37 year Old and I have purchased LIC Bima Gold (Money Back) policy in 2008 worth Rs,21000/- per year annual premium and last pre,ium date in 2023, policy end date 2024, date of expiry of extended term 2032 .

Sum assured = 400,000/ + bonus, extended term cover 2,00,000/ accidental benefit-4,00,000/

2) In 2006, I purchased Jeevan Anand worth Rs.15000/- annually last premium date 2027.

Sum assured = 300,000/ + bonus.

I have paid (11*15000=165000) till date & to pay 10 yrs more.

3) In Jan 16 I purchased HDFC term pan.

After reading many blogs I feel I made mistakes in rushing to purchase these policies now I want to correct all of these and now want only term plan and ELSS.

Please suggest on how to proceed.

Thanks a lot in Advance.

Deepesh RaghawHi Sachin,

Your policies are quite old.

Unless the premium is crowding out your other investments, suggest you continue with the plans.

Just that don’t purchase such plans in the future.

sachin kDear sir

Please reply my query, I am eagerly waiting for your reply.

Deepesh RaghawAlready replied.

What do you want to know?

HarishHi ..

Good Day !!

I started a Jeevan Anand Policy 21years term on November 2015 & Paid Premium of 1,34,282 per year. Just Now i’m realising how bad an investment it was. Please advise me whether i Should pay the third premium & then go for a surrender or make it a paid-up policy.

For your info after discontinuing this policy, i have planned a term Insurance worth 2 crores and to invest the remaining part in Mutual Funds. Please advise.

Thanks & regards,

Harish

Deepesh RaghawHi Harish,

Purchase of a term plan needs to be done before you do anything with your Jeevan Anand plan.

In case you don’t have to continue, surrender is likely a better choice at this stage.

Don’t pay any additional premium.

Btw, iIs this premium crowding out your other investments?

HarishHi Deepesh ..

Definitely i will purchase a term plan before exiting from Jeevan anand.

To get something out of it (Surrender Value) I need to pay the third premium next Month. So once I pay it does it make sense to leave it as a Paid-up policy rather than surrender ??

This is not overcrowding my other Investments but I feel by coming out of this i can make much better equity related investments (since i’m willing to take moderate risks).

Your suggestions will be much appreciated.

TIA !!

Regards,

Harish

Deepesh RaghawHi Harish,

Getting something out has always made for a good trap.

How much will you get if you pay one more premium?

I am not a big fan of making policies paid up, especially when maturity is so many years away.

LIC plans and equity investments are quite different in risk and return profile.

Don’t just go by good returns in equity markets in the last 3-4 years.

I am not saying you shouldn’t invest in equity. Just that during good times, the perception of risk goes down.

HarishThanks a lot for your valuable advice.

Regards,

Harish

AtharvaI have a Old Jeevan Anand policy with Annual premium of Rs.1,18,000 for 21 years (sum assured : Rs. 24 lacs).. I have paid for 9 years already and still 12 years are remianing.. I see about Rs. 9 lacs of Bonus accumulated so far… I want to know what would be the wise decision (surrender/paid up/continue) at this point of time considering low returns that I am seeing..

And, what would be the Surrender value and paid up value at this point?

Please advice, as I am thinking seriously about continuing this plan with these high premiums annually but with low returns..

Deepesh RaghawAbout surrender and paid-up value, please contact your agent or the nearest LIC branch.

Btw, since you have already paid for 9 years, suggest you continue with the plan.

Just that do not make fresh investments in such plan.

I assume this premium is not crowding out other investments.

VenkatHi

Thanks for the wonderful article.

I have also taken Jeevan Anand and the policy paying term is 21 years and maturity is 80 years, is that something you can suggest what is this 80 years means, is that just life cover or I have wait till 80 years completed to get the benefits?

I have paid for almost 7 years, now I feel just to get the full money back I can continue to pay till 21 years, but I am not sure what is this 80 years maturity means

Deepesh RaghawUnder Jeevan Anand, your life cover continues even after policy maturity.

Think you should continue the plan unless it is crowding out your other investment.

PriyankHi Deepesh,

Thank you for helping out so many of us.

I need an advice on surrender, paid up or continue LIC new jeevan anand. Details- Policy commencement year- 2014, 21 years, Annual premium- 54056. Vested bonus – 1,03,000. Made 3 premiums and 4th is due. I already have a term insurance plan and don’t need much for tax savings as PF covers most of it.

I have also have SBI Maxgain home loan (overdraft facility with 8.65%) where I park all savings to save interest. What would you recommend?

Thanks

Deepesh RaghawHi Priyank,

Is this plan crowding out your other investments?

Rahul BhattacharyaI have a policy in reduced paid up state. Can I regularize it, and make it in force?

Deepesh RaghawYou can revive policies. Suggest you go through the policy wordings

However, you need to see if you need to do that.

AnonymousThanks Deepesh,

Please find below details and suggest shall i surrender the policy or continue ? yield rate is 6.57

I have a policy-821 – New Money Back 25

– paid 3 premiums

Name Mr. PAVAN P Age 27 SA 1000000 Premium 57734 Term 25 yrs.

Benefit Illustration

1>Your life is insured for Rs.1000000/- Sum Assured for a period of 25 years and you are required to pay Rs.57734/- for 20 yrs term as premium exclusive of service tax.

2> In the years 2019,2024,2029 and 2034 you will receive Rs.150000/- being Survival Benefit @15% of BSA.

3> On Maturity in the year 2039 you will receive Rs.1950000/- being 40% of Basic Sum Assured + Bonus + FAB as Maturity value.

Deepesh RaghawYou are welcome!!!

Is this investment crowding out your other investments?

Do you have adequate life cover?

AnonymousNo Deepesh, Apart from that I don’t have any other investments and life cover too…!

sureshDear Deepesh,

I have invested in Jeevan Anand in 2006 with annual premium of 13,021/-. I have paid till Aug 2017. Can you advise should I surrender, continue or convert as paid up. Looking for your kind advise.

sureshI think I did not given full information, please see below.

Jeevan Anand

21 years tenure

Half year – 13,021/- (per year 26,042)

Started in 2006 and paid till 2017 Aug.

Look forward to your response, kindly let me know if you need any further information.

Deepesh RaghawHi Suresh,

In my opinion, you should continue the plan. Consider the plan as part of your debt portfolio.

sureshThank you for the quick response Deepesh.

I have two more Komal Jeevan for the amount 2,00,000 each. Paid more than 6 years.

one is 8094/-

second is 7,256/-

Do you suggest any better one to replace?

Thank you in advance

sureshsorry.. missed again 🙂

Below premium amount is half yearly.

one is 8094/- (per year 16,188)

second is 7,256/- (per year 14,512)

Deepesh RaghawI have not gone through the policy wordings.

Most likely, continue is going to be a better choice.

SunilHi Deepesh,

Need your advice. I work in the US, still on Visa, unsure when or if I get my greencard ever, might or might not return to India depending on personal/Visa situation . I am wondering should I continue the policy , make it paid up, or surrender. My confusion is that in any of these case, I might have to pay 30% tax to bring the money back to USD. So going forward I prefer not to continue paying premiums and rather put that money into US Mutual funds or NRI Fixed Deposit ( I get atleast 6.5% Fixed rate and repatriate back to USD free), plus term insurance is cheap in US. . But if I have to return to India, I think this gives a good tax advantage in 80C (Right now I cant claim any tax advantage). So should I surrender or Pay-it up or continue paying premiums with uncertainity being biggest questionmark? Dad enquired and said if I surrender I lose first year premium and will get only 30% of remaining premium

I have two LIC policies:

1) New endowment, Enroll Date=2014, Sum assured=15L, Policy Term=21 yrs, Premium=69,000 yearly (Was 35,000 half yearly , but I made it to Yearly last year). Total Premiums paid=3. Vested Bonus shows 1.5 Lakhs

2) New endowment, Enroll Date=2015 dec, Sum assured=1oL, Policy Term=21 yrs, Premium=53,000 yearly . Total Premiums paid=2 (I have to pay 3rd premium next December to complete 3 years). Vested Bonus shows 0 (I assume it will show value once I make December payment and complete 3 premiums)

Please advise. Also in case I Pay-up the policy, does the Vested Bonus that is shown online currently, guaranteed at the end of term or would it reduce if I make the policy paid up? In other words is the vested bonus shown currently assuming that premiums are paid for the rest of the years?

Thanks,

Sunil

Deepesh RaghawHi Sunil,

Mathematically, it may make better sense to surrender the plans.

However, if it is not a big portion of your overall annual investments, you can continue.

Personally, don’t see much sense in making these new policies paid-up.

Will unnecessarily clutter your portfolio.

Either continue or surrender.

Btw, interest on NRE FDs is exempt in India but taxable in US.

SunilSmall correction – Second policy is Jeevan Lakshya. Also for first policy I paid 3 full years premium

SunilHi Deepesh,

Thank you and very much appreciate your comments and prompt response. That gives me a good clarity and I have decided to continue the policy. I was under the impression that if I ever had to bring the money back to USD , say after 17 years, I need to open an NRO account (not the NRE) and I was thinking they simply deduct the 30% of the “principal (maturity amount)”. But it appears that NRO account only deducts 30% of “Interest earned on the principal”. I guess the summary is that NRE interest will be taxed in the US, however NRO interest will be taxable at India. So apparently I am not losing the principal portion.

Will continue paying. Let it be a “hidden investment” 🙂

Thanks and Regards,

Sunil

Deepesh RaghawHi Sunil,

Only income or gain is taxed. Principal is not taxed.

Btw, You can remit up to 1 million USD per financial year even from NRO account. (https://www.personalfinanceplan.in/nri-corner/nri-corner-nre-nro-and-fcnrb-deposits/)

Btw, you don’t have to keep money in NRO account. You can invest somewhere else too.

NRO interest will be taxed in both India and US. As I understand, you can get credit for taxes paid in India.

NRE interest will be taxed only in US.

AnonymousThank you Deepesh. That really helps!! Thanks a bunch

SunilThank you Deepesh. That really helps!! Thanks a bunch

Deepesh RaghawYou are welcome.

Will really appreciate if you could share the post with your friends/family too.

SunilThat was me again. Somehow the name field got omitted.

Thanks,

Sunil

AnuragHello Deepesh,

Appreciate your effort on detailing different financial matters..

I have the following insurance policies, and after reading your blog, I have realized that I was going in a wrong direction.

Could you please guide me on which one I should surrender /make as paid up policy? I am 39 year old.

1. Plan : Jeevan Anand (T.No. 149, LIC), Sum Assured (Rs. 500000) , Commencement Date: 05/09/2005, Policy Term: 74 ( Premium payment term : 20), Premium : 6,925.00 payable Quarterly

Already paid 12 years, 8 more years to complete the full term. Should I make this policy as Paid-Up or complete the tenure?

2. Plan: New Endowment Plan (T.No. 814, LIC), Sum Assured(Rs. 1235000) , Commencement Date: 03/11/2015, , Policy Term: 21 ( Premium payment term : 21) ), Premium : 57,984.00 payable Yearly

Just paid 3rd year premium. Should I surrender or make as Paid-Up or complete the tenure?

3. Plan: The Endowment Assurance Policy (T.No. 14, LIC), Policy Status : REDUCED PAID UP

4. Plan: e-Term (T.No. 825, LIC) , Sum Assured (Rs. 5000000) , Commencement Date: 28/03/2016, Policy Term: 35, Active, Premium : 14,700.00 payable Yearly

5. Plan : ICICI Prudential Life Insurance(Term) , Sum Assured (Rs. 10000000) ) , Commencement Date: 15/04/2016, Policy Term: 30, Active, Premium : 13,715.00 payable Yearly

Thanks & Regards,

Anurag

Deepesh RaghawHi Anurag,

You are welcome.

Assuming the annual premium is not crowding out your other investments, here is what I would have done (if I were you). I am not saying this is the best choice.

1. Continue

2. Surrender

3. you have already made the policy paid-up

4 and 5 are term plans. So, you can continue.

anurag.urThank you so much Deepesh.

Srikanth NimmagaddaHi Anurag,

New Jeevan Anand – 21 years

Halferly premium – 286000 sum assured 1 crore

number of payments made so far – 3 years

planning to make it as paid up policy, Pls advice.

Deepesh RaghawHi Srikanth,

You are allowed to make the policy paid up after paying 3 premiums.

However, since the annual premium involved is huge, do consider the implications.

Vaishnavihi,

I have paid 35000 yearly premium for 2 years now. I was 25years old at that time of policy issue. I have realised it was bad choice to take LIC jeevan anand for tax saving. What if i stop premium now and wait till end of 30 years (policy term) ? Or do i have to pay premium for next 1 year and stop premiums ? However I also relaised if i invest 35000 amount in another MF I will get more returns.

Deepesh RaghawHi Vaishnavi,

IF you work out the numbers, the surrender is likely to be a better choice. That means no further premiums.

Please understand LIC policies and mutual funds are very different products.

Suggest you work with an investment advisor.

DilipHi Deepesh,

I hope you are doing well. I really appreciate you helping so many people with your professional advice. I need your advice too.

I wanted a Life insurance policy in 2015 and hence contacted a relative of mine. I blindly believed him and he ended up selling me a retire and enjoy policy. It has 20 New Jeevan Anand policies in it. I have now realised that this policy neither gives me enough life cover for the premium I pay nor does it give good returns which start only from 2031. I have paid 3 annual premiums(each premium is 2,36,000) so far. The first policy matures in 2031 and the last one in 2050. I am unable to decide if I should surrender or make these paid up or continue.

Could you please suggest on the following:

1. The 5 policies that mature first(2031-35)amount to a premium of 1 lakh(Total premium I pay till 2035 is 17,31,751 for these 5 policies). The sum assured for these is 14.65L. I was wondering if I can continue these policies as a safe investment as New Jeevan Anand returns 1.25*Sum Assured + Accrued Bonus. The accrued bonus on these 5 plans so far is 73,250. Or should I surrender these or make them paid up?

2. From what I understand under New jeevan Anand, if the policy holder survives the term, he can collect the Sum Assured*1.25 + Accrued bonus and the life cover of Sum Assured continues until the age of 99. Is this correct?

3. The premium of the remaining 15 policies amount to 1,36,000 every year. I don’t want to continue these. So, I am thinking of either making them paid up or surrender. Thanks to you, after reading your article above I am inclined to surrender them as the term is higher. Please suggest.

4. If I surrender the policies – Will I get the full accrued bonus plus surrender value or would it be a percentage of accrued bonus plus the surrender value.

5. While selling the policy to me the agent never spoke about these multiple policies and their maturity dates going until 2050. Can I complaint to LIC or IRDA that I was mislead in this regard. I was so naive when I recieved the policy documents that I did not pay attention to the dates and hence paying the price now.

Thank you so much in advance.

DilipI forgot to mention. I’m a 32 year old Nri staying in UK. I can’t claim any tax benefit as well since I’m not a tax resident of India currently

Deepesh RaghawHi Dilip.

Appreciate your feedback. Please do share the post with your friends too.

1. You can continue the first few policies, if you want. Personally, I don’t like the concept of paid-up policies.

2. After maturity, coverage is only Basic Sum Assured.

3. Surrender

4. Expect about 30% of premiums paid back.

5. No point. Nothing can be proved and not much will come out. After all, you signed the dotted line.

DilipI will definitely share the post Deepesh. It will save many people’s hard earned money from being wasted. Thanks for your valuable suggestions to me.

Deepesh RaghawYou are welcome, Dilip.

DineshExcellent article, Very Informative.

Sir, I need your help on below policy.

I have started a LIC Jeevan Shree (Plan-112) in 2001 for Sum Assured: 5,00,000 (Half yearly Premium 12,634 )

Premium Paying Term: 16 years and Policy Term is 25 years.

I have paid all the premiums. (Premium Paying Term completed last year)

Now in LIC portal I could see :

Sum Assured: 5,00,000

Policy Status: Fully Paid-Up

Policy Benefits: 5,00,000

Guaranteed Additions: 6,37,500

Badly as I need to close one of my loan, I am thinking of surrendering this policy and planning to invest access amount in some mutual funds. Also planning to start a term insurance.

Will there be any tax/ deduction if I surrender this policy?

Whether I will be getting Sum Assured + Guaranteed Additions if I surrender now ?

Please suggest.

Thanks for your time.

Deepesh RaghawDear Dinesh,

You can check the surrender value from your LIC agent or branch and take a call.

Since it is not a pension plan, there will not be any tax liability on surrender.

NagulThanks for your post and it is very helpful to me.

I have Jeevan Anand policy (t.no. 149) started in the year 2010 with annual premium of Rs. 25173 for 21 years and sum assured is Rs. 5 lacs . Already paid 7 premiums.

Wanted to know can i continue OR to make paid up this policy ?

Thanks for your hepl!

Deepesh RaghawYou are welcome!!!

If I were you, I would continue.

Anonymousthank you!

UdayI have Jeevan Anand Policy(waste-took long to realization).

Premium – 66000/- Annual, for 25 years, 15lac Sum

Paid for 27 month – 148500/-

Dont want to continue now, so i have stopped paying more premiums.

Is my decision right? i know i have lost but still i will cover that from other options.

But want to leave from LIC as low returns

Deepesh RaghawHi Uday,

If you don’t have any other life insurance plan, suggest you continue with this plan.

If you have purchased adequate life coverage already, then we can consider other options.

viswaSir,

I have totally 14 Policy’s Jeevan Anand (Plan-149) paying from 2008

Total Sum assured 1400000

Total Premium Annual : 12755

Planning to Surrender and invest in PPF, FD and some amount in Term insurance

Please advice

Deepesh RaghawWhy do you want to surrender?

AnonymousSir , I mainly i did this for tax saying but since i already have housing loan and employee PPF covering it i thought of surrendering the LIC policy and invest in PPF and MF …. Please advice

Deepesh RaghawNot the right reason for surrender.

If I were you and the premium was not a stress on my cashflows, I will continue the plan.

AjayHello Deepesh thanks for sharing this article it’s very helpful.. I have 3 Jeevan Anand policy and I am paying 80000 annually and paid 7 instalment till now and have no other investment please let me should I surrender it or continue with this.

Deepesh RaghawHi Ajay,

Unless this investment is preventing you from making other investments, suggest you continue with these plans.

KeerthanHi Deepesh,

LIC agent has approached me for new endowment plan for 16 years, sum assured Rs. 9,00,000, premium is Rs. 60,000pa, maturity benefits is Rs. 21,24,187 after maturity if I opt for pension plan Rs. 16,197pm till the death of policy holder at his death maturity benefit amount will be paid to nominee.

My questions are

1. Is this a good plan or is there any better plan in term-insurance or others?

2. I felt it was a good plan, after reading your post I am in a dilemma in selecting the policies.?

3. Please advise a better plan if there is any one.

Thanks in Advance,

Keerthan

Deepesh RaghawHi Keerthan,

Stay away. Do read the post on my blog on New Endowment plan.

Sudeep SachdevHi Deepesh

I have one Jeevan Saral Policy (myself) and 2 Jeevan Anand policies (myself and my wife)

Jeevan Saral

Yearly premium is 48040. Sum assured is 10 Lacs.

Premium paying term is 25 years. I have paid 10 premiums and 15 premiums are remaining.

Should i continue or surrender or paid up?

Jeevan Anand (2 policies)

Yearly premium is 25634. Sum assured is 5 Lacs.

Premium paying term is 21 years. I have paid 10 premiums and 11 premiums are remaining.

Policy term is 72 years.

Should i continue or surrender or paid up?

I have a homeloan where i am paying 8.65% interest and taking 2 L income tax benefit

I am adequately covered with term plan . Should i surrender policies and replay homeloan?

Thanks

Deepesh RaghawHi Sudeep,

In my opinion, you should continue in both policies till maturity.

AnonymousThanks Deepesh

Can you pls explain reason behind this

Looking at return i thought surrender is best option

Thanks

Sudeep

sudeepThanks Deepesh

Can you pls explain reason behind this

Looking at return i thought surrender is best option

Thanks

Sudeep

Deepesh RaghawHi Sudeep,

You looked at the past returns or the prospective returns?

nikhil bDear Deepesh,

I have enrolled for 3 LIC policies ( Bad knowledge on the tax exemption at early days).

1) Jeevan Jyothi Plan 149 — policy Term 70 –QLY premium payable Rs 14006 – Sum assured 10,00000 – Enrolled date-28/05/2011

2)Jeevan Jyothi Plan 179 — policy Term 16 –YLY premium payable Rs 26150 – Sum assured 500000 – Enrolled date-23/01/2013

3)Jeevan Jyothi Plan 179 — Tpolicy term 20 –QLY premium payable Rs 994 – Sum assured 100000 – Enrolled date-24/05/2010

I would like to stop these policies . I have paid the policy premium till dated. Please advise me if i need to opt for policy paid up or surrender mode

Deepesh RaghawHi Nikhil,

Why do you want to surrender these plans?

Think (1) and (3) plans can be surrendered.

poonamHi sir,

I have a ICICI Pru guaranteed saving life insurance policy which i surrender just few days back. The total sum assured amount is Rs. 126000 and term plan is for 15 years from which I need to pay the premiums only for 7 years.

I paid all my premiums til its 7th year and no premium was due. now in 2018, i put a request to surrender and i got only Rs 75,800 instead of my full fund value of Rs. 126000 . Moreover i check into my customer portal it was showing total Rs. 157000 (Rs. 126000 + 30000 bonus)

Sir i paid my all premium ; so how can they deduct approx. 50,000 amount from my total premium paid amount. I sent a mail to them and they told me that they will acquire a surrender value of funds for at-least 3 years. What it mean?

I don’t understand anything; please help me . What should I do now.

Thanking you

Deepesh RaghawHi Poonam,

1.26 lacs is Fund value or Sum assured?

In my opinion, insurance companies typically don’t mess up these calculations.

The customer portal shows the sum of Sum Assured + bonuses.

This is the amount you would get if you continue the policy for the entire term. Clearly, the total amount will keep on growing every year with increase in bonus.

In my opinion, it does not reflect the surrender value, which can be much less (depending upon terms and conditions of your policy)

What is your annual premium?

PankajHi Deepesh,

What an insightful article. Very enlightening. I was looking up on IDBI Federal Lifesurance Whole Life Savings Insurance Plan when the google took me to your article on “traditional life insurance plans”. I had bought this plan in March 2015 only for investment purposes as I already had an adequate term insurance plan. However i now realise that it’s been a very stupid choice on my part. The sum assured is just 5,08,735 and I pay a yearly premium of 40000/- on this. The premium payment term is 20 years – I have paid 3 premiums and having second thoughts as the 4th premium due date is almost here.

Similarly I just bought LIC New Jeevan Anand last year, again for investment purposes only. The cover is 4,00,000; premium is 23k and the payment term is 20 years.

After reading your write-up, I am thinking of making both paid up. I have already paid 3 premiums of IDBI federal policy. Will pay 3 more premiums on LIC before making that paid up as well. Am I making the right decision?

Deepesh RaghawHi Pankaj,

I have never been a big fan of paid-up option.

Suggest you surrender both the plans (since the plans are new) and not pay any further premiums.

Don’t throw good money after bad

AnonymousThanks for the suggestion Deepesh. But I am hardly getting even 40 percent of what I have already paid if I surrender. Isn’t making them paid up better in such a scenario?

Deepesh RaghawYes, that is a hit.

You need to compare what you get today for surrender and what you will get at the time of maturity if you make the policy paid up.

And yes, surrender amount will earn you returns.

DeepakHi Deepesh,

I had purchases LIC Jeevan Anand (Plan 149) in Nov 2011. with sum assured 10 lac at maturity at age of 28. Policy premium paying is for 30 years. My premium is half yearly around 16.3k (32.5k yearly). I had already paid 6 years premiums (around 2lacs till date) and next 7th year 1st premium is due on May 2018. My age is 34 yrs and will be 35 yrs in June 2018. I am already investing in PPF & Mutual funds.

Please help what to do with this LIC policy. Should I stop paying premiums for it?

One problem is that Policy has been issued by some remote branch very far from my place and LIC agent who opened it from that branch also left LIC Agent job. So, I am paying premium online and had never gone to that remote branch

Please help urgently as my next LIC premium is due in May 2018

RajeshHi Deepesh,

Appreciate all that you do so that most people can salvage their investment errors & misjudgements often done due to certain obligations or inability to say NO in the first place.

1. I have bought 2 Jeevan Anand Policies in 2004 for my wife & me for a PPT of 21 years maturing in 2025. The annual premium is 53,000 & I have paid 14 premiums do far & have another 7 premiums to pay.

2. I also have 2 Asha Deep II critical illness Policies since 2004 wherein I am paying Rs. 10,000 annually maturing in 2029. I’ve another 11 premiums to pay & have paid 14 of them.

3. I have taken a child policy called Komal Jeevan wherein I paying 1,27,000 annually since, 2013. 7 years left.

4. I also have 2 Max Life Money Back Policies paying Rs. 20,000 annualy wherin I have 3 premiums left.

The SA is just Rs. 1 lakh & I have to pay 60,000 !

I have borrowed a sum of RS. 10 lacs on my LIC policies. I want to make my policies paid up/surrendered. How does it work when I have taken a loan. I am unable to pay nearly Rs. 2,10,000 annualy on all these policies now. Plus the huge interest on the loan on the policy. Pl advise.

In all I have paid 17 lacs till now, with a commitment of another 17 lacs for the remaining term in ally Policies combined . My financial commitments are high & I am unable to pay for these low return investments.

Pl advise.

Regards

Deepesh RaghawThanks Rajesh for your kind words!!!

Difficult to comment frankly. If you are finding it difficult to pay premiums, then some of the policies have to be cancelled.

Making the exact choice requires a deeper look into policy wordings and calculations. I will give you a broad idea keeping into account the number of years of premium paid.

1. Jeevan anand: Very close to maturity. If possible, try to manage payments for this one.

2. Asha Deep: you have two of these. If you have adequate health cover, you can atleast let go one of these.

3. Komal Jeevan: You can let go of this plan. Almost all child plans from LIC are quite nonsense. This one does not look any different. Ensure you keep investing for your kid’s education.

4. Max Life money Back: You can let this go too (if money is a constraint).

Ensure that you have adequate life cover before you let off these plans.

If you surrender plans, LIC will square off the outstanding amount from the money to be paid to you.

What you face is one of the biggest problems with traditional life insurance plans.

In addition to poor returns and low coverage, the lack of flexibility in such plans and high exit cost make such plans a poor investment choice.

SagarThanks a lot for the guidance.

I have Jeevan Tarang ..paid 7 out of 20 premiums . I called the lic customer service and they said I will get back 575000 out of 756000 premiums amount paid.

questions

I should surrender? Or paid off ?

In case I surrender ,can I do this.?

I have a home loan . I am thinking of taking the loss of 2+ lakhs and prepay the home loan principal. Infact I think I can use the remaining home loan principal under 80c

Lastly I believe there will be no reversal of tax benefits received, as the premium is 108000 and the SA is 22 lakhs.

Do you suggest any different options ?

Thanks Again.

Deepesh RaghawHi Sagar,

It is difficult to give a black and white answer.

You have an option to surrender or make it paid up.

If I were you and the premium payment was not a big issue (and not crowding out my other investments), I would have continued with the plan.

It is not just about mathematics and taxes.

SagarThanks Deepesh. That is what I have decided now 🙂, to continue.

Regards

Sagar

KalyanThanks for the info Deepesh.

Please help me decide the next step to take..

I have Jeevan Anand Policy where am paying 40400 per year. Sum Assured is 10 lakhs.

I paid for 5 years. Is it better to surrender now ? Please advise.

Deepesh RaghawHi Kalyan,

If premium is not a problem, I suggest you continue with the plan.

vishal karaleHello sir i have purchased NEW JEEVAN ANAND POLICY with profit in 2015 and paid 4 premium until now.Policy tenure is for 21 years ie i need to pay until 2035 and maturity will be in 2036.Premium is 65000 yearly.Please do suggest what can i do.

Rajat AgrawalHello I have a LIC Jeevan Anand Policy and Premium is about 85000 p.a. for 35 years and Sum assured 30 lakhs , I have paid for 3 years and policy Surrendered value is 142000 and paid up value is 257000, Now what should I do if I want paid up it right now it has more 32 years , What should i get after 32 years if i paid up policy now. Currentymy bonus + sum assured is 309000/- Can I get another bonus on reduced paid up value or only 309000 after 32 years? Plz. advise me .

AshutoshHello Sir,

Excellent Article. Need an advise.

I am 35 years old and bought Jeevan Anand (149) in the year 2011 with annual premium of around 75K.

considering I have already paid almost 9 premiums by now, do you think I should continue, paid up or surrender. The vested bonus is around 5 lacs as they say. And moreover I do not have any term plan as of now.

Deepesh RaghawHi Ashutosh,

Are you finding it difficult to afford the premium?

If not, then continue. Else, stop.

You must also stop if this premium is preventing you from making other meaningful investments.

In any case, purchase a term insurance plan first.

Jasneet SinghHello Sir, I have a doubt. I have started personal finance.

My father got me a LIC Endowment Policy with SA 995000 for 35 years. The annual premium is 25362. I have paid 4 out of 35 premiums. I am thinking of surrendering and investing the funds’ elsewhere.

Can you guide me what to do?

Jasneet SinghAlso, sir I used a third party maturity calculator and it gave the following result. On the SA ie 995000 it added the bonuses on the rate of 48/1000 of SA as 35 times 47760 = 1671600 plus a final additional bonus of 2300/1000 which comes to be 2288500.

Hence the toal maturity amount is 995000 + 1671600 (yearly bonus) + 2288500 (fab) = 4955100.

Since i’ve paid 4/35 premiums. What should be my plan of action?

Kindly reply.

P Subramanyam RaoHi Deepesh,

I have purchased New Jeevan Anand (815) Plan in 2015 and paying annual premium of 85000 (breakup of 11 policy) for 30 years, I purchased under pressure from neighbour and was not much aware of the insurance product, i have gone by the benefits and life covered she explained and bought it.

Now after going through the Thread, i am little disappointed and understood that i made the wrong decision.

can you please let me know what should i do now to reduce the loss/impact. Thanks in advance for your valuable input.

Thanks

Subramanyam

Deepesh RaghawHi Subramanyam,

If the policy premium payments are not crowding out your other investments, suggest you continue in the plan.

BalajiHi Deepesh,

I enrolled for LIC New Jeevan Anand on 2016. Sum Assured of 2L, with a premium of 10911/- per year for a term of 21 years. After reading this article and the suggestion you’ve given to a similar query. I have decided to continue paying and not to make this mistake again in the future.

I would like to appreciate you for the time you have taken to write this article and replying for viewer’s queries. I’m really fascinated by your dedication on replying to queries and giving right advices. I was amazed to see that you are doing this since December 7, 2015. After reading this article, I understood that I’m not the only one stuck in this trap. The comment thread has almost covered all the issues related to the traditional savings plan and you’ve given a honest, unbiased advice.

Thank you so much for helping the people to make a clear decision on escaping this trap.

Keep it up!

Deepesh RaghawHi Balaji,

Thanks for your encouraging words.

Let’s keep this simple.

This policy is 4 years old. Hence, the maximum damage is already done.

Unless the policy premium is crowding out your other investments, I suggest you continue this plan until maturity.

Consider this part of your long term debt allocation.

And don’t feel too bad about your choice. I hold an erstwhile Jeevan Anand policy myself. 🙂

AnonymousHi Im 59 years old and purchased lic old jeevan anand policy in 2008 for ppt of 30 years and paid premium for last 12 years. should i surrender the policy or leave it as paid up policy or continue paying premium till maturity. what is your suggestion as term plan at this age are very costly.

Deepesh RaghawDear Sir,

If you don’t need life insurance, you do not need term insurance either.

If you need, I am not sure if the current Jeevan Anand provides adequate coverage.

Purely from investment perspective, the damage is already done.

You can continue until maturity if the premium payment is not a challenge.

VigneshHi,

I know this is a comment on very old post. I just happened to go through the above a couple of days ago and decided to post my question which has been pestering me for a long time now.

What will happen if i dont want my policy to mature post premium payment terms ?

To give more clarity, for eg.

I have purchased Jeevan Umang LIC policy with premium payment term as 15 Years and Sum Assured as 10,00,000 Rs. Yearly Premium is 80000 Rs.

Now from a approximate calculation, post 15 Years of Premium payment, i’ll be getting an approximately 70 to 80K per annum as returns till the age of 100 Years, which is when the Policy Matures. Considering the Revisionary bonus for the policy is anywhere around 45 to 50 Rs per 1000 Rs of Sum Assured, i would approximately get 1 Cr Rs when the policy matures.

Now, say if after receiving 80K per Annum for 10 Years post my premium payment term, if i have to declare that i dont wanna continue getting this 80K per annum, rather than that i would like to opt out of this yearly returns and get whatever i can get from the Insurance provider, what will be my returns ?

At first place, will i be allowed to do this, if yes how much would be my approximate returns and will it be beneficial.

Note: I’ll be thankful for ppl who might be suggesting me a better options, but the intention of this post to know the reality of above mentioned scenario and plan.

Thanks

Arun KumarHi Deepesh,

Thanks for you wonderful article!!. It was really helpful.

I have purchased Jeevan Anand 815 plan (21 years) and have paid 1,28000 for two years. I could see if i surrender the policy i would loss 256000. I don’t have any term insurance and my age is only 24 now. Bought this policy without any prior knowledge. Now my question is should i pay 3rd year premium and make the policy paid up or it would be better if i surrender the policy now itself. However i could see that i will suffer a serious loss.