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Life insurance : How to get rid off bad insurance?

Last updated: August 12, 2019 | by

Life insurance  is a key component of a financial plan. If chosen well, it protects the financial well-being of a family in case of any unfortunate event. However, if it has been bought for the wrong reasons then the same policy can become a drain on your finances and savings.

Recently I met a prospective client who has 6 Life Insurance policies with a total Sum Assured of Rs 11 Lakhs. Most of the them are Endowment policies. The total premium paid by him is around Rs 32,000 pa. Some policies were bought with the prime reason to save taxes. Now, he is of the view that some of the policies are not worth enough to hold and want to get rid of them.

The psychological barrier of losing the money, is stopping many policyholders to exit from these kind of policies. It is better to exit from the unwanted policies instead of compounding the mistake. There are plethora of financial products available. Choose a better product(s) and achieve your financial goals.

So, how to know if you have unwanted insurance?

how to know wrong life insurance

Low Cover: The quantum of cover depends on various factors. But one thumb rule can be, the total insurance cover should be atleast 40 times the annual premium paid. If your policies do not offer you this kind of minimum cover then you are paying too much for the cover.

High premium: Another thumb rule is, the premiums should not account for more than 5 – 8% of your annual income. I have seen clients using 40 % of their savings just to pay Life insurance premiums.

Tenure: If your policy matures before you retire then it won’t be of much help when you need it most. The insurance policy should cover the entire span of your working life.

Returns: Most of the endowment and money-back policies offer you roughly 6% returns. Typically, a 20 year traditional plan (money-back or endowment) will break even around 8th year of the policy term. If you are not content with this kind of returns then you can identify them as unwanted policies.

Time value of money: Do not blindly go by projected illustrations given by your agents or advisors. A traditional policy may look attractive today by looking at the projected maturity corpus. But, always factor inflation into the calculation. For example: You may be offered a maturity value of Rs 50 Lakhs in 20 years. At 6% inflation the today’s value of it will be reduced to Rs 15.6 Lakh.

Does it fit your financial plan? If you have a stable and rising income then money back policy is not required. At the same time, if you are not content with low returns then endowment policies are not suitable. Unit Linked Insurance Policies (ULIPs) may not be suitable for old age individuals.

What are the available options?

1)  Let the policy lapse: This is best suitable if you had paid premiums for 1 or 2 years only. If the policy is a total mismatch to your requirements, it is better to let it lapse eventhough you stand to lose the paid premiums. It is like junking a bad performing stock and investing in a better one. If you discontinue the policy then you will stand to lose the tax benefits availed in the previous year(s). In case of ULIPs (issued after Sep 2010), if discontinued in first 2 years then the sum assured will be paid after the lock-in period of 5 years with minimum guaranteed return of 4%.
2)  Surrender the policy: You can surrender the policy if you had paid the premium for two / three years.
You can get guaranteed surrender value which is roughly 30% of premiums paid excluding the first year premium. The life cover will cease to exist. Recently IRDA has come up with new regulations on minimum surrender values for new traditional policies. The surrender value must be atleast 30% of the total premiums paid. After the 4th year it would be 50% and it can go upto 90% of the premiums paid in the final policy years. IRDA has also put cap on surrender charges levied on ULIPs.

3)  Make it a Paid-up policy: It is a better alternative to surrendering your insurance policy. You can turn a policy into a paid up one if you had paid the premiums for three years.If you just stop paying premiums then the policy will be automatically converted into REDUCED PAID UP policy.

The Life cover on endowment or money back policies will be reduced proportionately to the number of years for which the policy was in force.

Paid up value calc life insurance

For example: If you have an endowment policy with a cover of Rs 10 Lakh for 20 years and convert it into a paid up policy after 5 years then the reduced sum assured will be Rs 2.5 Lakh.

So, you will have a life cover for Rs 2.5 Lakh for the next 15 years. There is no need to pay any premiums during this tenure. The future bonuses will not be accrued. The reduced sum assured along with the accrued bonuses (if any for 5 years) will be paid on maturity or on death of the insured.

I believe that the paid-up option is the best way to exit an insurance policy. The policy holder will get rid off unwanted insurance and at the same time he/she will continue to enjoy the life insurance cover. Don’t forget to inform your dependents or nominee about the policy status.

4)  If you have insurance policy which is due to mature in next 2 or 3 years then it is advisable to continue with it for full term.

Wrong life insurance options to exit

Before you decide to junk your policy, check if you have sufficient life insurance coverage at a reasonable cost. It is advisable to take Term insurance with sufficient coverage. Life insurance is a risk mitigating product, do not consider it for savings or investment.

( You may visit my article on “Best Online Term insurance plans- a  comparison“ for more information on Term insurance). Do you hold any bad insurance? Please share your thoughts.

Continue reading : ‘8 ways you could lose your Income Tax Benefits.’

Sreekanth Reddy:

Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 12 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. These should not be construed as investment advice or legal opinion."

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  • One more thing, Yesterday I got an email from Max life about the same policy and in it, they offered to avail Special Revival Scheme, And Under this scheme, I don’t need to pay premiums for the lapsed period as the policy’s effective date of coverage can be extended maximum by 1 year; and the maturity date will also be shifted accordingly. Hence, my premiums will also get adjusted accordingly to make it easy on my pocket and within that email, they also have a click here button to avail which redirect me to the max life portal but there it says “This scheme is applicable only for lapsed policy” so I do not understand if my policy has not lapsed yet then why they are mailing me to avail this scheme. Can you please suggest something? Thanks

  • I have Max Life Future Genius Education Plan Policy and I paid two premiums yet, the first in 2017 of amount ₹ 1,06,719.47 and the 2nd in 2018 of amount ₹ 1,04,469.39 but from 2019 I am facing a big financial loss in my business and after this COVID-19 situation it’s got worst so I just want to surrender this policy but it required minimum three premiums to be paid to generate a surrender value and now when I checked in Max Portal then it shows policy status as “Premium Overdue” and asking to pay ₹3,53,261 which I definitely can’t pay, Is there any way so I can pay some amount so it can at least generate some surrender value and I get some money back instead of losing all money, Thanks waiting for your advice

  • Hi Mr.Srikanth,
    Greetings, thanks for your wonderful article, which gives a very clear idea to take decision regarding the junk insurance policies. Myself Prakash I am a NRI. I need one clarification, from 2019 i have started to pay HDFC super income plan. My annual premium is 1 lakh rupees, and I have paid 2 years. Sum assured is 6 lakhs and my payment term is 8 years and I will get pay out 75000 from 9th year onwards and on 16th year I will get 6 lakh plus the bonuses ( literally don’t know how much it is, because it is not guaranteed). When I choose this plan, I have zero knowledge in life insurances and I was traped to take this policy for availing a locker facility. My third year payment is on this October 2021. I was in confusion to surrender or continue this policy. After reading your article I have an idea to make the policy to lapse. Is this the correct decision or I have to pay one more year and have to make this as a paid up policy?. Please give your valuable suggestions. Thanks for your time and consideration.

    • Dear Prakash,
      May I know if your have adequate life insurance cover?

      (Please note that it is not mandatory to take a life insurance product for opening a Bank locker facility. I believe that banker might have pressurized or mislead you!)

  • Dear Sreekanth, I bought LIC Future Plus single premium 2 lacks policy in 2005 for 15 years. It got matured on 13 April . Total value on 13 Apr 30 was 725188/-however I couldn’t visit the branch due to covid and it went into annuity. Now, after taking pension for 8 months, I went in for premature surrender of the policy …but Lic paid me only 472000 and 15812 pension for 8 months. I m unable to understand why LIC deducted 2,24000/-……….can LIC really deduct such a huge penalty for premature surrender ? Please help !

    • Dear Archana,
      Looks like they have a paid you a portion of the accumulated amount as ‘commutation’ and the remaining amount is used to buy an annuity plan.
      Kindly check with them again.

  • Hello Sreekanth, I have once Jeevan Shree policy since 2002 for 18 years. It has matured however I haven’t see the amount returned back to my bank. My agent is no longer at the same address. I am not in the same state so could you please advise me how best to chase this? Thanks

  • Hello Mr Sreekanth,

    I have two Lic Jeevan Saral Policies (MA on death- Rs 15 lakh each) , one is mine and other my wife’s. I have paid premium of Rs 72000 pa for 12 years on mine, and my wife has paid the same premium for 9 years now. My policy is for 31 years and my wife’s for 20 years. Recently I have come to know that LIC Jeevan Saral is a big scam and investors who wish to surrender are paid only 30% of total promised surrender value(total paid premium plus loyalty bonus) ie only about Rs 2.75 lakhs in my case and Rs 1.75 lakhs in my wifes case. This is very disappointing to see our life’s saving being snatched by LIC. Many investers have gone to ombudsmen or court regarding this unfair policy. Do you have any update regarding this cheating done to investors of LIC jeevan saral policy ?
    Also, in this scenario what is the best option to follow in our both cases,
    1) should we continue paying heavy premiums for remaining 10-15 years ?
    2) should we stop paying premiums and let it be a paid up policy ?
    3) should we surrender and take what they offer(30% of premiums paid so far) ?

    Kindly suggest/advice on what we should do in this scenario. Would sincerely appreciate your kind thought in this matter.

    Grieved Investor

  • Hi Sir, My lic agent suggested me to go for 814 endowment policy with 3k premium per month till 21 yrs. She said, after 21st year, I will be getting the sum assured in 8 installment for every year. This means I will get the sumassured,bonus,fab in 8bonds which I need to surrender and get the money for every year. Can I not be able to get the Money after it get mature after 21st year in lumpsum ? I don’t wants to get the money in installments. Please advise what should I inform to my agent.

  • Hi Sreekanth,

    I am trying withdraw money from my PF account. when I applied for withdraw through online it was getting rejected because PAN not linked to the UAN. I have a service of 9 years and the total PF amount 160k. I don’t know how can I withdraw my PF amount. I need your suggestion on this. to apply physically I am living in a different state

    thanks in advance

  • hi sreekanth, i have one query regarding my LIC Policy of Rs.500000 for which i have paid 10 premium. past 2 years i have not paid any premium. now i have got letter to pay premium through revival plan. WHAT HAPPENED TO PAID UP OPTION?
    Please guide what should i do.
    should i ignore this letter or tell LIC to make it PAID UP.

    • Dear Shashi,
      Your lic policy would have become a Paid-up one. You may ignore the intimation. You may check if your policy had become paid up or not through LIC portal.

  • Hello Sreekanth,

    Thank you for the informative article and also for all the efforts for replying in detail to every query !!
    With the same anticipation, ‘would like to share my query regarding the Max Life Life Partner Plus Limited Pay Endowment to Age 75 Plan, policy that we started on 16-FEB-2009. We haven’t paid the premium since 16-AUG-2018, the Revival End date being-Aug-2021. We are getting reminder emails from the insurer, however, we are exploring the options of discontinuing as the sum insured is just 6 lakhs.
    Could you please help out with what will be the best option for as with minimum losses.
    Warm Regards,

  • Dear Sreekanth,

    Thank you very much for this wonderful article, it is very useful.

    I have one question regarding LIC New Jeevan Suraksha – I (Plan-147) that I started in 2011, I’m paying an annual premium of 50,000 on this policy. The maturity year is 2036. Is it possible to convert this policy into paid up like we can do with Jeevan Anand and what will happen to this policy if I to convert it into paid up(in case if it is possible).

    Thanks and Regards,
    Iftikhar Alam

    • Dear iftikhar,
      Kindly note that LIC New Jeevan Suraksha – I (Plan-147) is a Pension plan.

      If, after at least two full years premiums are paid in respect of this policy, any subsequent premium be not duly paid, the policy shall not be wholly void, but the amount of Notional Cash Option shall be reduced to such a sum as shall bear same ratio to the original, as the number of premiums actually paid shall bear to the total number of premiums originally stipulated for in the policy.

      The policy so reduced will thereafter be free from all liabilities for payment of the within mentioned premiums but shall not be entitled to participate in future profits. The existing vested bonus additions will be attached to the reduced paid up policy and this will determine the reduced annuity payable on vesting. The option of commutation of 25% pension will also be available on the vesting age.

      Kindly note that there will be tax implications as well.

      The tax treatment of Pension plan is different to Traditional life insurance plans / ULIPs plans.
      In case of PENSION plans, if you surrender before maturity, the entire surrender value is taxable at your current income tax bracket rate.

      You would also have to reverse all the tax benefits that you received under Section 80C of the Income Tax Act.

  • Hi, I want to purchase child policy. I have searched in market for that after searched I have got 2 policy of LIC 832 & 833, Bajaj Allianz Future gain policy. So could you tell me which policy is suitable for me. If you want to tell me another best policy plan, so pls advice me.

  • Hi 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? Also if I stop paying premium and if it will be come paid up, then, can I change nominee in paid up policy?
    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

  • Hi Sreekanth,

    I had taken this plan (Max Life Life Gain Plus 20 Yr 6 Pay) in 2011 and I paid already 6 years premium.
    Per year I paid 75000 and now interest what i am getting not even 6 % also.
    I had called to customer care to close this policy, they are telling if I am going to close before 20 years then I will not get even 50% of the investment amount.

    Can you please suggest me what I have to on this situation.

    Thanks,
    Mallik

  • Hi Shrikant,

    I have a small query pertaining to a endowment policy taken by me.

    I had taken a jeevan anand policy in Dec 2013 with a S.A of 5,00,000 /- with annual premiums of Rs 36504 /- for a policy period of 15 years. I have completed the 3 years lock in period and would like to surrender the policy . After getting in touch with the LIC agent, he is telling that the total value of the policy is Rs 1,76,512 ( premiums paid till date – Rs 1,09,512 plus Bonus of Rs 67000. The surrender value of the policy as per him is Rs 67000 and as a result, he is dissuading me from surrendering the policy as the total loss for me would be Rs 1,10,000 /-. I was ready to foregoRs 40000 but now Iam having second thoughts after hearing him out. Could you please advise me on the same as I would not like to continue the said policy but the total loss is putting me off.

    Thanks,

    Charan

  • hi sree,

    i have Lic jeevan saral policy started in 2010 sept. monthly premium of 2042 for 21 years. this is the only policy i am having. sum assured is 500000. my relative asked me to open this. today i dont feel to continue this policy.

    can u tell me how much amount i will get back if i stop this policy.

    also i am 30 year old is there any good policy for me that you can suggest.

    please guide.

    thanks

  • Dear Sreekanth,
    Its Debasis. I have two money back policies from LIC with Premiums 10480/- and 26199/- both annually. The Sum assured are 2 lac and 5 lac respectively. Both of them are active from 2007. What should I actually do with them? Should I discontinue both of them and take a Term Plan? What will be the amount of the said term plan as my annual salary is 7.2 Lac? If so suggest me the term plan that will suit my need. Please advice.

  • Hi Shreekanth

    One doubt need to clear regarding surrender of Policy ? Post reading your blog I am convience for surrender Junk LIC policy.. I have sufficient term plan for my self.

    My doubt is if I surrender policy did I lost tax benefit which I claim last FY ? Did I have to pay tax on next ITR filled for previous year tax benefit taken ?

  • Hello Sree,

    I have below plans from LIC, need you expert advice on these insurance cum investment options. Should i opt for surrender or Paid up options and I need to how to calculate sum assured value and tax obligations.

    1) Jeevan Surabhi(25 yrs)- Rs. 1 lac<started 1998, premium 7298 yly).
    2) Jeevan Tarang(20yrs)-Rs. 20lac<started 2007, premium 98440 yly).
    3) Money back policy(t. no75 for 20yrs)-Rs. 8lac<started 2012, premium 4337 mly) for my wife.
    4) Jeevan Saral(20yrs)- Rs.5lac(started 2012, premium 24000 yly) for my wife.

    Hunting for TERM plan, pls suggest if any particular point to watch out for or as suggested KEEP IT SIMPLE!!.

    Thanking you in advance

    Regards,

  • Dear Sreekant,

    Kindly suggest about my Financial portfolio..
    Three years back taken two LIC policy (New Jeevan Ananad & new Money back) each of 5Lakh SA with 30000Rs for 20yr & 25yr respectively.Shall i continue or stop.

    I have HDFC Life Progrowth Plus ULIP plan taken 3 years back with yearly premium for 60000.Now i am seeing charges are high.Shall i continue or stop?

    My mistake to mix-up Insurance with Investment.

    Secondly,two month back,for SIP for 500Rs in High cap,500Rs in Middle/small cap & Rs 500 in Balanced fund.
    1000Rs monthly saving in sukna samridhi for my daughter & Rs 500 monthly in PPF.

    Pls suggest…my portfolio where big doubt in LIC & HDFC Life.

    • Dear ravikant,
      Suggest you to kindly buy a Term insurance plan and then surrender the existing LIC policies.
      You may discontinue the ULIP policy but you will get the fund value after 5 years only. The discontinue fund will get around 4% interest till 5th year.

  • Sir, I have started investing in four mutual funds through SIP with details as follows: Mirae asset emerging bluechip fund (1.5K), L&T India value fund (2K), DSP blackrock microcap fund (1.5K) and Birla sunlife equity fund (2K). My time horizon is 10-12 years. Is this portfolio is good/balanced or should I go for some other mutual funds? Kindly comment.
    Thanks

  • Sir- I’m a minor(under 18 age) policyholder of LIC. Is it possible to avail the surrender value before maturity date. If not, what is the other options by which i may get the benefits without discontinuing the policy ?

  • Dear Sreekanth,

    First of all i would like to thank you for great work you are doing by supporting people in need through your guidance.

    I too have few query below regrading my financials please suggest:

    1. I have one LIC money back policy Jeevan Surbhi SA-4Lakhs for 15yrs . Premium is 35800 per year. 3 year i have already paid . Next year i will get 25% of SA that is 1 lakh. I want to discontinue as i want to go for Term Insurance. Please let me know should i discontinue now or next year after getting the 1 lakh as money back. What should i do paid-up or surrender. If either when this year or next year after getting money.

    2. I have one Health insurance from Max Bupa for SA 10Lakhs. It includes hospitalization expense on accidents as well.
    3. I am going to buy one term insurance from Max life and adding one accident rider as well for 50 lakhs. Please suggest if it is fine.

    • Dear Gautam,
      1 – If you surrender the policy next year after getting the money-back, the insurance company will adjust the survival benefit payment from Surrender value. Even paid-up value is also done after accounting for survival benefit payment.
      Suggest you to surrender this policy now. But before doing so, buy a life cover through a Term plan.
      2 & 3 – Fine.
      Make sure you have Disability cover (permanent & temporary).

  • Hello Reddy,
    I have purchased SbI flexismart insurance policy (endowment policy) in 2012 with a monthly premium of 2100. The sum assured value is 10x annualized premium. After going through this discussion, I am having doubt that didn’t i purchase a wrong policy? Kindly comment

  • Hi Srikanth,

    First of all thanks for answering the queries. I hope I had read these articles back in 2006-07 when I undertook some “bad” insurances.

    I have following three policies

    1. ICICI Pru Maximiser (I assume an ULIP) in effect from Mar 2006 ; annual premium 18K. Paid 7 installments (total 63K) cover of 5 Lacs.

    2. Exide Life (earlier ING Vysya) Freedom Plan in effect from mid 2006, annual premium 25K. Paid minimum 3 installments (toatal 75 K) sum assured 125K. Fund value (NAV) as of mid 2016 : 115K

    3. Bajaj Allianz New SecureFirst – Silver in effect from End 2006, annual premium 40K. Paid minimum 3 installments (toatal 120 K) sum assured 8 Lacs. Fund value as of mid 2016 : 179K

    what would you suggest for following three points above ?

    Thanks in advance.

    May your blog enlighten many others and reach top rank in google seo.

    • Dear Sridhar,
      Me too, I should have had the knowledge about these low-yielding plans or costly ULIPs…Read: 5 Personal Financial mistakes that I have committed 🙂
      Are you happy with the returns generated by these policies?
      ICICI Prudential Elite Life Maximiser is an ULIP – You may surrender it.
      Exide policy – You may surrender it.
      Bajaj Policy – You may surrender it.
      If you do not have Term insurance cover, kindly buy it and then discontinue these 3 policies. Invest the saved premium in suitable and better investment avenues.
      Read:
      List of best investment options!
      Best Term insurance plans.

      • Dear Sreekanth,

        Thanks for your valuable advice and pointing to useful links. As a valuable CPA I think your website is very well organised.

        I assume since my policies are already 10 years old (since inception) the surrendering cost might be small.

        Thanks again !

  • Hi Sir,

    I have taken ICICI Pru Guaranteed Savings Insurance Plan.

    Premium Term: 7 years
    Premium Paid Term : 4 years 3 months.
    Returns : After 15 years

    I already have a term insurance.

    Can I go ahead and stop paying premium to make it Paid Up Policy ? Kindly advise.

  • Hi sir,

    I have taken new bima policy 179 for 16 yrs till than i paid 3 full premium. This is my 4th yr and my policy due date is 24 nov 2016 but before that I want to surrender my policy due to some personal issues. Can you please tell and calculate how much i will get if i surrender.

    premium:- 14970
    Paid:- 3 yrs (full premium)
    Sum assured:- 300000
    term:- 16yrs

    • Dear Saurabh ..To know the exact surrender value, kindly contact your insurer/agent.
      LIC new bima policy (179) is a combination of Money-back cum Endowment plan features. It is advisable not to invest in these kind of plans.
      You may kindly buy a term insurance plan.

  • Hello Dear Sreekanth,

    I am 38yrs old & have LIC Jeevan Anand policy running since 2004 Dec wherein i pay annual premium of INR 1,01,500. The Sum Assured is 25Lacs. The premium needs to be paid for 25yrs while the risk cover continues after 25yrs too.

    I also have 50L coverage in LIC Amulya jeevan term plan.

    Would it make sense to continue the Jeevan Anand or terminate it and buy another 50L term insurance? Please advice.

    Thanks.

  • I have new jeevan aanand Policy with annual premium 57413 and starting from oct. 2014.
    I have taken lic New Jeevan anand in Oct. 2014 for 21 years with yearly premium of 57413/- rs what is your opinion on this .what should i have to do ? should i surrender after completing 3 years or i have to convert it into paid up policy?
    If i surrender it after three years how much money i will get?

  • Hi Sreekanth,

    I have gone through all the comments in this thread and I am damn sure I have made the mistake. I seek your expert help before discontinuing my existing LIC policies. FYI, I just entered 27.
    My current policies are below:
    1. Jeevan Tarang (178) : Premium-12434 HLY (3 years completed in June 2016)
    2. Mixed moneyback policy, a combination of 4 policies (2 years completed in Nov 2015)
    a. The Endowment Assurance Policy(14): Premium- 2335 YLY
    b. Jeevan Chhaya(103): Premium- 2713 YLY
    c. New Bima Gold(179): Premium- 3721 YLY
    d. The Money Back Policy – 20 Years (75): Premium- 3229 YLY

    For the second moneyback policy, I will get moneyback but I do not remember the amount(anyway, I will get that).

    Please suggest if I need to surrender or opt for PAID-OFF. Which will have less loss in both the cases.
    I will go for term insurance once I get rid of these worst policies.

  • Sir,

    I am new in banking.. my age is 22 and I started a business.

    I am from poor family background… And I become murga of yes Bank executive in may 2016….

    I purchase max life gain policy 8 year / 15 year maturity. So I finally decide to exit.. I only paid 1st premium of 40000 rs.

    But please provide me best way to exit .. that I can minimize loss ….

    Thank you

  • I have bought an LIC plan called JEEVAN LAKSAHYA 833 plan with that a rider installment plan. I have paid only the first premium and now nxt mnth is my second premium,(half yearly) however I am not happy with it as this was done by a relative for me. I wanted some profits for myself as paying for 20yrs and getting low returns is really not my plan. I am payin 36,000 for a yr. 18,000 half yr. I want to withdraw this can I do so?? will I get atleast some amount back of what iv payed?? whats the best option that is adviceable?? plz help. or even if I take anothr LIC policy will the same amount get replaced in the new plan or I have to put in new payment all overc again??

  • Hello Sreekanth,

    I am 36 years housewife and me and my spouse have bought following LIC policies
    1) Jeevan Tarang-SA 2LAc annual premium Rs 13944 start date 2012 end date 2023
    2)Endowment policy-SA 105000 annual premium Rs 5000 start date 2006 end date 2026
    3) Jeevan Anand SA 2Lac annual premium Rs 11203 start date 2012 end date 2032
    4)jeevan saathi SA 2LAc annual premium Rs 9690 start date 2012 end date 2041
    5) Jeevan saral SA 2Lac annual premium Rs 9608 start date 2013 end date 2045.
    I feel now we are paying too many premiums with less returns in long run.
    Kindly advise which of these should be surrendered or paid up? Do we need to approach agent to make policy paid up?
    Also new to mutual funds so need advise for following purpose:-
    Have a 7 year daughter and need to invest in a 10-15 year horizon for marriage and education. Kindly advise.
    Thanks in advance

    • Dear Sushma,
      Below are my suggestions;
      1 – You may consider SURRENDERING the policy.
      2 – make PAID-UP.
      3 – Surrender.
      4 – Surrender.
      5 – Surrender.
      There is no need to approach agent/office for making PAID-up. You may just discontinue paying the policy premiums and the policies would be treated as PAID-UP ones.
      Kindly let me know if your husband as adequate life cover through a Term insurance plan? (if not, he can consider buying term plan and then consider above suggestions, for the policies which are in his name).
      Read:
      Best term insurance plans.
      If life is unpredictable, insurance can’t be optional.
      Kid’s education goal planning.
      Best Equity funds.
      List of best investment options.

      • Hello Sreekanth,

        Thanks for guiding.As per your suggestion if I surrender the policies you stated how is the amount calculated for surrender?
        I read it’s 30% of premiums excluding first year and any additional term rider/accident rider premium.In that case the amount would be very low to what I have paid for these years. Do we get any vested bonus when surrendering?

        My husband has a term insurance from his company but no individual one.
        Kindly suggest if still he needs to buy on stand alone basis.
        Also personal accident insurance would be good one apart from term insurance ?

        Thanks
        Sushma.

        • Dear Sushma,
          No, you will not receive any bonuses.
          Surrendering a policy makes sense only if the amount (surrender value) received on doing so and invested in another investment avenue which can generate a better return than the policy would have on completion of tenure.
          Suggest your husband to take stand-alone term plan.
          Read : Best term insurance plans.
          It is advisable to take basic cover via term plan and buy a stand-alone Personal accident cover with Disability risk cover.
          Read : Best Personal Accident insurance plans.

  • thanks……

    (1) ok. i pay six half yearly premiums now can i convert my money back policy in paid up simply not pay next premium nothing do eles.. it is right.

    (2) ok

    (3) as per my calculation i get 75000/- after 20 years or on death ( 3/20 ×500000) its right..

  • Dear shreekanth,
    I take a LIC money back policy in 2013 with yearly primum 18000/- (500000 sa). In 2016 i complete 3 premiums. In 2017 i get 20% 50000/- money back(20% every 4th year). If i not pay 4th premium and get paid up after receive 50k money back.

    (1) Is that possible?

    (2) if i paid up then i will have to pay back the tax exemptions or not would have availed on the premiums paid until now.

    (3) as per my calculation i get 75000/- after 20 years or on death ( 3/20 ×500000) its right . pls give your opinion… thanks

    • Dear prem,
      1 – If you make the policy PAID up one now, you will not receive your next survival benefit ie money back instalment.
      2 – As per income tax laws, if the policy is terminated before premiums for two years have been paid, the tax relief granted earlier will be revoked. In you case, you have paid more than 2 policy premiums, so no issues.
      3 – Suggest you to make this plan PAID Up or surrender (if you have a term plan, else buy a term plan and then discontinue this policy).
      Read: Traditional plan like money back : A terrible investment option??

  • Hello Sir,

    I like your post very much, I have a query regarding unwanted policy;

    I have a LIC Jeevan Saral (165) Policy and following are the details;

    Start Date : July, 2013
    Mode of Premiums : Half Yearly
    Premium Paid : 6 times (Last Premium Paid on Jan, 2016, 7th premium due on July, 2016, which I was not paid)

    Is my policy will converted into PAID-UP mode ?

    Thanks & Best Regards,
    Rajib

  • Hello sir,

    It very nice to see that you are providing valuable comments to all customers. Am holding below policies with loan amount & also am housing loan of 31L which commenced from JUNE 2015. Please advice me what should i do, i dont have any other policies (like medical etc.). I feel its difficult to manage my EMI along with LIC insurance.

    LIC Money Back Policy for 20 years
    Amount Assured Rs.4,00,000.00
    Vested Bonus 124800
    Instalment :12,743.00 half yearly
    Date of Commencement 22/04/2008
    Date of Maturity 16.07.2018

    Date of Loan 20/08/2015
    Loan Outstanding 62,500.00

    LIC Jeevan Saral for 20 years
    Amount Assured Rs.2,50,000.00
    Instalment :1,000.00 Monthly
    Date of Commencement 30/01/2010
    Date of Maturity 16.07.2018

    Date of Loan 20/08/2015
    Loan Outstanding 50,000.00

    Regards
    M.Pradeep

  • hi sreekanth,
    we have 4 lic policies.
    1.my youngest brother has 2 lic policies
    a)LIC JEEVAN ANAND OF RS5 LACS
    INSTALLMENT RS 17443 START DAT: 1/12/15 MATURITY DATE 1/12/45
    b) LIC MONEY BACK POLICY OF RS 2 LACS
    INSTALMENT:RS 12200 Start date: 28/11/98 maturity date:28/11/18

    2. second brother has 1 LIC JEVAN ANAND POLICY of Rs 5lacs
    start date: 28/12/13 maturity: 28/12/37

    after reading your article i realise they are a bad choice.
    what should i do for each policy.
    please elaborate how much i loose
    poor in calculations
    if i make my second brothers policy paid up then how much i loose.
    please help
    regards,
    shashi

  • Dear Sreekanth
    My husband has taken following Insurance plans and some of them are near maturity but most of them are draining our earning. Could you please advise us to retain which polices and to surrender or Make it a Paid-up?
    Insurance Plans
    1. LIC Money Back Policy for 20 years
    Amount Assured Rs.100000
    Instalment :6426 yearly
    Date of Commencement 15.07.1998
    Date of Maturity 16.07.2018
    2. LIC Endowment Policy for 26 years
    Amount Assured Rs.218000
    Instalment : 8262 yearly
    Date of Commencement 28.02.2003
    Date of Maturity 28.02.2029
    3. LIC BIMA KIRAN POLICY FOR 30 YEARS
    Amount Assured Rs.200000
    Instalment : 2997 yearly
    Date of Commencement 28.01.2002
    Date of Maturity 28.01.2032
    4. LIC Jeevan Chhaya (Table 103) is a Money back child endowment plan
    Amount Assured Rs.100000
    Instalment : 5235 yearly
    Date of Commencement 16.04.2003
    Date of Maturity 16.04.2024
    5. Reliance Cash Flow Plan for 16 years tradition plan
    Amount Assured Rs.165100
    Instalment : 15018 yearly
    Date of Commencement 11.02.2011
    Date of Maturity 11.02.2027
    Reliance Cash Flow Plan 165,100.00
    Accident Benefit Rider 150,000.00
    Basic Benefits : On survival of the life assured to 11th February 2027, ` 33,020.00 plus the vested bonuses will be payable.
    On survival of the life assured in 11th February 2015, 2018, 2021 and 2024 the amount of ` 33,020.00 each will be payable.
    On death of the life assured at any time prior to 11th February 2027 , ` 165,100.00 plus the vested bonuses will be payable. Additional benefits attaching to this policy : Accident Benefit Rider
    6. Reliance Child Plan a 10 year plan
    Amount Assured Rs.100000
    Instalment : 13600 yearly
    Date of Commencement : 18th July 2012
    Date of Maturity 18th July 2022
    Flexible finance benefit on the 18th July in 2019, 2020, 2021 and 2022, ` 25,000.00 each will be paid. On the 18th July 2022 the vested bonuses will be paid.

    Thanks.

  • Dear Mr. Srikanth,

    Thanks for the valuable information about the insurance.
    My friend had taken a jeevan saral policy 3 years back. The below are the details.
    Term-25 years
    Yearly Premium – 48,040
    At the time of taking the policy, the agent told that ” The maturity value will be minimum 54 lakhs by showing a chart.”
    Whether it is true or not?

    As of my knowledge the maturity value is wrong & not possible(54 lakhs).

    I suggested my friend to surrender the policy and take a term insurance plan & invest the remaining money in PPF or mutual funds.
    But I am unable to convince him ‘how the maturity value is wrong as per the agent words.’

    Can you please give details of the LIC jeevan saral plan maturity benefits.
    Please give any links about the LIC jeevan saral.

    Thank you

    • Dear Murthy,
      Jeevan Saral is an Endowment plan with few value added features. It is advisable not to invest in these kind of traditional plans if one wants to get decent or better returns.
      Kindly read this article, click here..
      (Kindly note that this article has been written by one of good friends who is also a Blogger like me.)

  • Dear Sreekanth,

    I have a “HDFC Savings Assurance Plan” with below details.

    Policy Started on: March 2011
    Annual Premium:15000
    Tenure:10 Yrs.

    I understood its not a good plan, however not sure I need to continue with this as i have already paid more than 50% of premium (82500/). Please suggest should I close this, or continue with out paying premium or anything else.
    Thanks again..

  • Hi Sreekanth,

    Thanks for sharing such good article. I am 34 yrs old, and I have purchased some life policy from the agent. But, I think it is my bad decision to trust them. As they assure me good return for the policy, then making bank fixed deposit.
    I have following policies:
    1)Max Life Life Gain Premiere policy term 20 years, premium payment 08 years, started on 04-Sep-2014, Annual Payment 70,000/- and paid two premiums.
    2)HDFC SL ProGrowth Super 2 policy term 10 years, premium payment 10 years, started on 02-June-2014, Annual Payment 50,000/- and paid three premiums.
    3) LIC policies all paid only 1st premium.
    a) LIC’s New Money Back Plan – 20 Years(with Profit) Annual Payment 38,000/-
    b) Jeevan Tarun Annual Payment 9,000/-
    c) LIC’s New Endowment Plan (With Profit) Annual Payment 33,000/-
    d) Children Money Back Plan Annual Payment 8,600/-
    e) LIC’s New Jeevan Anand Annual Payment 37,000/-

    I want your help for financial planning, I want to avail 80c tax benefit, but didn’t want to continue the policy which will return to bad investment.
    Please help me to select which policy to continue and which to quit and when.

    Thanks

    Biplab

    • Dear Biplab,
      Better late than never!
      1 – It is a traditional endowment plan. You may let it lapse and book losses.
      2 – It is a unit linked plan, to get decent returns you may have to stay invested for 10 years (entire tenure). Check out which Fund have you selected??
      3 – You may let all of them lapse.
      Kindly buy a Term plan, stand-alone personal accident cover & health plan with the saved premiums and the remaining premiums you may invest in Equity mutual funds for long-term goals like Retirement etc.,
      Kindly read this article: List of important articles on key aspects of Personal Financial Planning.

      You may invest the saved premium in equity mutual funds for long-term goals like Retirement or to buy Term insurance plan, Personal accident cover & health plan.

  • Hi Sreekanth,

    I have a set of endowment policies (18 Nos to be precise) from LIC where i pay an annual premium of 30K.Total tenure is for 24 years and i have already paid for 9 years.I donot find the returns attractive,surrender value is only about 50% of the premium paid.Pls let me know how to convert this into paid up ?

  • Hi sree
    One more suggestion. I have personal loan rs 5,50,000. This month first EMI rs. 14437. I think Bank took insurance for the loan but i dont remember. If not, can i consider this when i check my tern insurance coverage or can i take separate insurance for that load. Which option is good.

    I am checking ICICI iSmart Term Insurance

  • Hi
    I recently got this blog when i am searching for financial planning. Great. I read some artcles which i interested and got this too.
    I am having lic jeevan anand policy sum assured rs 200000. It is started on july 2010 and maturity on july 2025 with the premium paymenr term 16. The premium amount is 14437 pa. Based on the article i think this is not good and basically created my father to save my tax.
    Please guid me which option is good now. Based on that plan for term policy

  • Dear Shree,
    I have LIC Jivan Anand Sum Assured 10 lacs and 78k premium yearly, Paid 6 premiums,after going through your article realized its not worth!. Still 10 years to go!,should I make it paid Up or surrender. If surrender then a big loss, I don’t mind waiting and I don’t need this money now. So thinking of paid up, kindly advice.
    I would be buying Term plan ICICI, I am 48 yrs now, Planning to pay 10 premiums, but online it shows policy term is up to 80yrs,does that mean I am covered up to 80yrs even though I am paying for 10 yrs.
    Plz clarify

    • Dear Satish,
      Consider surrendering it. If you can afford a big loss then think in a different angle, why can’t you re-invest the surrender value in equity oriented options (as per your requirements, if possible), take risk and expect to get decent returns from here-on. 10 years is a very long-duration, high probability to generate decent inflation adjusted returns..
      Jeevan Anand is a combination of Endowment + Whole life features.
      Do you have term insurance cover?

      • Thanks Sreekanth,
        Yes I will be buying Term plan in few days, that was the part of my question too.
        I will follow your advice and surrender my jivan anand.
        Finalised two term plans, ICICI and HDFC for 1 cr. I have to pay 35 and 36k premiums respectively until 60yrs age, ie 12 premiums for me. but policy will be in force for 65 yrs. Please advise which one I will go with.
        If I invest in Mutual fund through SIP for 5 years and then unable to pay SIP further, but still hold the investment for 10 years, will my investment grow? Suppose accumulated 10,000 units with NAV 22 rupee on 5th year but when withdrawing at 10th year NAV is 35 rupee, Will I get 35 per unit price or the same 22?
        I would appreciate your guidance and advice.
        Thanks a lot.

          • Great sir, Thanks a lot
            As mentioned by you in earlier query, Selected HDFC balanced fund and Franklin short term debt 5000k SIP.
            In Today’s sudden new development, company is laying off some staff with cash benefit of around 20 lac. I too fall under that category and planning to opt for cash benefit and join another company with relatively same package. Kindly advice where I can park this amount safely for at least 10 lac for 12 yrs. and 5 lac for 8-10 years. Is it advisable to invest lump sum and one single fund or different funds

            Pls………. advice

            • Dear satish..When you have investment horizon of 12 years & 10 years, may I know why you would like to invest in ‘safe’ investment/saving options? If you have not expected this amount to come and if you are sure you are going to get a new job with same salary package then you may afford to take risk, am I right??

              • Agreed Sreekanth….
                I thought to keep 10 for daughter and 5 for son who are 12 and 7 years respectively for marriage and son’s study !That’s why bit risk averse but agreed to take risk ………….
                Kindly advice Lump sum or SIP route? suggest funds. I will follow your advise as always.

                • Dear Satish,
                  Kindly let me know the goal target years.
                  I assume you have more than 10 years for daughter’s marriage & son’s Education goals, so consider investing in a Balanced fund + MIP fund + Diversified equity fund.
                  Ex – TATA Balanced fund + Birla Sunlife MIP II welath 25 plan + Franklin Prima plus (You can make lump sum investment). You may allocate major portion of your corpus to Balanced & MIP funds.

                  • I am Indebted to you!!.
                    Great Sreekanth, thanks for the advice.
                    As I mentioned earlier I have HDFC balance and Franklin India Short term As SIP.
                    You Mean 6:6:3 lacs lump sum in the Funds you suggested?
                    Yes, my time horizon is more than 10 yrs.
                    If yes from you I will go ahead.
                    Thanks many

  • Dear Sreekanth,
    I have a policy from LIC internatinal, its pension plan tenure is 15 years, sum assured is 50,000 USD and additional accidenta coverage of 50,000 USD.
    I have paid premium for two years, currently the policy is lapsed. I want to discontinue the policy, how to get back the premiums back, as I dont want to get the interest on the premiums paid.
    Please let me know any chances og getting back my paid premium amount.

    • Dear Sunil,
      I believe that if you surrender your pension plan before maturity, the entire surrender value will be added to your annual income and taxed as per your tax slab. Also, you will have to pay back the tax exemptions you would have availed on the premiums paid until now. Apart from this, two thirds of the surrender value is to be compulsorily used to purchase an annuity plan.

  • Hi Sreekanth,

    I am 33 years old, non-smoker and don’t have any illness history.
    My Insurance detail as per following
    1. LIC Bima Gold, Premium INR 23748, sum assured INR 5 Lakhs, Term 16 Year, Purchased in 2006
    2. ICICI – Guaranteed Savings Insurance Plan, Premium INR 60000, Sum assured INR 4.2 Lakh, Premium term 7 Year, Policy Term 15 Year, Purchased in 2012
    3. LIC Jeevan Saral (With Profit), Premium INR 40000, sum assured INR 8.5 Lakhs, Term 15 Year, Purchased in 2013
    4. Max Life – Online Term Plan, Premium INR 7000, sum assured INR 50 Lakhs, Term 35 Year, Purchased in 2014

    Please suggest on the following:
    1. Special Advice required for ICICI – Guaranteed Savings Insurance Plan – Shall I surrender it or stop the premium and keep the plan. As per ICICI Estimated Surrender value as on 6/2/2016 policy is Rs. 82,393.19/-
    2. Should I surrender LIC Jeevan Saral/ Bima Gold plan? OR just I stop the premium and keep the plan.

    Thanks

  • i am yogesh nikam i have taken lic jeevan saral in 2009 for 20 years @ the age of 22 with half yearly premium of 3034/- rs as per the chart by lic i will get 400000 after 20 years what is your opinion on this .what should i have to do ?

  • Hi Sreekanth,

    Thanks a lot for your valuable and knowledgeable article.

    I have a LIC Jeevan anand policy with below details–>
    Sum Assured: 1000000
    Policy Start Date: Sept 2012
    Annual Premium:35.5K
    Tenure:27 Years

    My current age is 27 years and have paid 4 premiums till now.Kindly advice shall i continue with policy or surrender or make it paid up.

    In case if it is made paid, request to kindly elaborate the cover/sum assured i will be getting and duration.

    I already have a term insurance of 1cr, health insurance of 5 lac and SIP of 10k monthly in below mutual funds.
    1)ICICI Prudential Focused Bluechip Equity Fund(3k)
    2)Axis Long Term Equity Fund(3k)
    3)Franklin India Smaller Companies(2k)
    4)Franklin India High Growth Companies(1k)
    5)HDFC Balanced Fund(1k)

    Thanks in anticipation!!!

  • Hi, Great article.

    Bad for me that I didn’t do much online study before buying investment/life insurance plans. I’m 35 yr old now.

    In 2010, I purchased “Max Life- Life Partner Plus” with 30,000Rs/annual premium. The premium payment term is 20 years and I’ve already paid 6 premiums.

    In 2013, I purchased “Jeevan Anand” with 33,600Rs/annual premium. The premium payment term is 30 years and I’ve already paid 3 premiums.

    Last month I’ve purchased one term policy (Max Life online term insurance plan) with 1 Cr cover till age 65 and one family floater health insurance (Religare health insurance- Care with super topup) with 10 lac Sum Insured.

    As now I’ve insured my health and life, I feel that I made a mistake by taking “Max Life- Life Partner Plus” and “Jeevan Anand” and should’ve invested the amount in some other option (pure investment).

    What do you suggest- Should I Surrender these policies or make them a Paid-up policy?

  • Hi Srikanth,
    I just have a doubt from my earlier clarification. If I opt for surrender of my Jeevan Tarang policy, I will be getting 3.56 lacs against the premium payments of 3.93. However if I make it paid up, I will get 7.41(includes bonus) at the end of year 2026. My question to you is does it make economic sense to wait for another 10 yrs to get the money or can I withdraw the amt now and put it either in ELSS or put some of the money in Home loan prepayment plus some in ELSS. Please let me know your views on this.

  • Hi Srikanth,
    I have Jeevan Tarang policy worth 8 lacs for 20yrs in 2006. I am paying 39376 yearly premium. If I pay for this year, I will complete 10 yrs of payment. My question is should I continue this policy or should I discontinue and go in for a term insurance. I understand that Jeevan Tarang is discontinued. But it has a unique feature of paying the insured 5 and ½ % of sum insured post maturity till the age of 100.

  • Hi Sir,

    Based on the shared information , I realise that I have made a not so prudent investmen and request your guidance.

    My situation : I have taken twopolicies of 31k(annually) eachMax Life Life Partner Plus Limited Pay Endowment to Age 75 Plan(20 pay). This would have been my 6th installment (due 31st March).

    Queries :

    1. How do I convert this to paid up policy ( if that is the best way forward). ?

    2 What would be the best insurance policy to invest this sum ?

    Regards,

    • Dear Denny,
      Do you have any other life insurance policies? Do you have a term insurance plan?
      1 – You may stop paying the premiums and this will make them PAID-UP ones. You may ask your agent/company to provide the Surrender Value quotes on these policies and this can help you take a better decision.
      Read : Term insurance Vs traditional plans like endowment policies.
      2 – Insurance is to cover risk and kindly do not make the same mistake again by treating insurance as an investment option.
      If you do not have adequate life cover, kindly buy a term plan.
      Read:
      Best Term insurance plans.
      List of best investment options.

      • Dear Sreekanth,

        I currently do not have any other insurance policies , I plan to take a pure term plan ( HDFC Click 2 Protect , 1 Cr with riders – IB & CI ).

        My existing policy , max life partner plus limited pay endowment to age 75 plan (20 pay), is due 31st March’16 – (2 policies 31K each). I did speak to the agent , but he said that there was no option of converting this to paid up , is this right ? Is there any means of verifying this ?

        Based on the guidance from the forum , i now plan to use insurance purely as a safety instrument and not for investment.

        Is this a better move ?

        Regards,
        Denny

  • Hi

    Nice to read possible solutions to get rid of traditional LIC plans. You have recommended that it would be better to make the policy Paid up in order to enjoy maximum benefits.

    However, I still believe that one should either let such policy lapse in case of newly purchased plan or to surrender the policy where one has paid premium for some years. (8 to 10 years).

    In case of policy lapse in case of a new policy, one won’t get anything back. But this will teach him lesson and hopefully, he won’t commit such mistake of “investing in traditional plans” in future.

    However, where one has already paid premiums for 8 – 10 years, it would still makes sense to surrender the policy and invest proportionate amount received in mutual funds for remaining years and add similar amount (equivalent to yearly premium) for balance years for which the policy would have been continued. In such a scenario, he can earn a decent return on his investment.

    In case a policy made paid up, there are chances that investor might loose track of investment. Also, after waiting for so many years, he will only get reduced SA. Hence, I believe return on investment is abysmally low.

    Is my analysis correct? Do let me know

    Thanks

    • Dear Rupali,
      If the policy is just say a one year old one, yes its better to get rid off it (allow it to lapse).
      However in case of surrender option, the decision can be dependent on the total tenure too.

  • Hi Sreekanth.,

    I started following all your article, its all useful and interesting; I clarified many of my doubts;

    Similar to above questions, mine is also related to LIC endowment policy; All the policy were taken by me during my initial stage of my career. I agree than i did not do much analysis; Now i could see there are other ways of financial planning to get a decent return more than offered by this traditional plans.

    Presently I have these plans with me;

    Jeevan Anand ( T.No 149) commencement date 28/10/2009 ; Taken 4 policies with term of yrs 21/20/19/18 all being SA for Rs 125,000; Qtr. pay being Rs 1,734/ Rs 1,836/ Rs 1,948/ Rs 2,073 ( premium mentioned for Qtr only) Accrued bonus each policy approx. Rs.33000(per policy)

    Jeevan Chhaya (T.103) commencement date 28/10/2009; Policy taken for 25 yrs ,SA 400,000,Qtr payments Rs 4,520 (premium mentioned for Qtr. only) Accrued bonus Rs 115,200

    My opinion is for paid up- reason being at least i could get all my premium paid & life cover for the paid up value at the end of policy term ( correct me if I am wrong)

    Personally i have not taken Term insurance & Medical insurance ( present coverage by office policy)

    Annual payments to these endowment plans approx. to RS 50,000; My plans would be to use this money towards medical insurance Rs17,000 ( 10 lakhs coverage) & Term insurance around 50 lakhs and balance would for other Equity investments

    Kindly Suggest

    Krishna

  • Hi Sreekanth,

    Nice articles produced by you on Life Insurance. I am 39 yrs old and I have LIC Money Back with SA 200000 purchased in 1999, Bima Kiran with SA 300000, purchased in 2001 and Jeevan suraksha with SA 460000, purchased in 2001. Total premium on these policies is approx. 23000 PA. I have taken 1.5cr online term plan recently which is split between LIC and HDFC. What is your advise on my existing LIC policies? Should I get rid of them and increase my term policy coverage?

  • Hi Sreekanth,
    Firstly very nice article
    I am 32 years old ,Due to the lack of knowledge I bought following LIC policies
    1)Jeevan saral( T.No. 165) ,sum assured- 2,50,000 ,started on 4/11/2008,policy term -20 years, paid 8 annual premiums(12010)
    2) )Jeevan saral( T.No. 165) ,sum assured- 3,00,000 ,started on 20/11/2008,policy term -35 years, paid 8 annual premiums(14412)
    3) )Jeevan saral( T.No. 165) ,sum assured- 5,00,000 ,started on 17/12/2009,policy term -35 years, paid 6 annual premiums(24020)
    4) New Bima Gold( T.No. 179) ,sum assured- 5,00,000 ,started on 17/12/2009,policy term -20 years, paid 6 annual premiums(17624)
    5) )Jeevan Chhaya( T.No. 103) ,sum assured- 1,00,000 ,started on 28/12/2013,policy term -18 years, paid 2 annual premiums(3125)
    6) )Jeevan Chhaya( T.No. 103) ,sum assured-1,00,000 ,started on 28/12/2013,policy term -21 years, paid 2 annual premiums(2659)
    7) Jeevan Chhaya( T.No. 103) ,sum assured-1,00,000 ,started on 28/12/2013,policy term -25 years, paid 2 annual premiums(2248)
    Please suggest, if it is beneficial to continue these policies?
    I don’t have any term policy. And please suggest term policy
    Thanks

  • Hi Sreekanth,

    I am having a Kotak Smart Advantage-(UIN-107L043V01) fund . I am investing in this ULIP from last 6 six years and it doesn’t seems to yield good returns. Is it better to surrender this and invest the amount in ELSS funds?

      • Hi Sreekanth ,

        Thanks for the reply. Actually i invested around 3.5 lakhs (4800 per month) in that fund and now as per NAV its around 3 Lakhs.
        First year amount invested in this ULIP will not be refunded right?
        If so how much amount i will get and what are the best ways to invest that lump sum amount which i will get after surrendering the policy.
        Please suggest…

        Thank you

        • Dear Narendra,
          Whatever is the fund value on the date of surrender, you can get that amount as SV.
          The best ways depends on your investment horizon and your financial goal(s).

  • Hello Srikanth,

    In the year 2008 my father forced me to go for LIC Jeevan Saral Plan with a monthly premium of 10,208 ( 2 policies with 5104 premium) and i have paid premiums for 7 years now with annual premiums of 122496.The maturity is of 15 years.
    Last year i have reduced the premium of one policy to 1104 and got back the surrender value with some risk amount deduction which i don’t understand their calculation. I am confused whether to continue paying for the remaining years or should i convert them into a paid up policies and invest in equity. I don’t want to lose my money which i have put in these policies for these 7 years. I have separately taken a term insurance of 1cr.

    Kindly advice which is the best option to me.

    Regards,
    Raghavendra P

  • Hi Srikanth,

    I have taken a money back policy in LIC with a premium of 29837 and maturity period is 25 years.

    Plan details are

    Need to pay 29837 for 20 years, will get a money back 75000/- for every 5 years i.e for 4 times and 6L money back after maturity period.

    Death coverage of 5L

    I am 26 years of age now and i dint make any investments till now.

    please give your comment on this policy and returns i would get.

  • Hi sreekanth,

    I have a LIC jeevan anand (T no. 149) endowment policy, SA is 500000 since 2009. Annual premium is 25634. Premium payment term is 21 years. I have already given 7 premiums.

    My husband has following LIC Policies:
    1. LIC jeevan anand (T no. 149) endowment policy, SA is 200000 since 2007. Annual premium is 14500. Premium payment term is 16 years. Already given 8 premiums.

    2. LIC jeevan anand (T no. 149) endowment policy, SA is 300000 since 2009. Annual premium is 15500. Premium payment term is 21 years. Already given 7 premiums.

    3. LIC Bima kiran (T no. 149) endowment policy, SA is 300000 since 1995. Annual premium is 2473. Premium payment term is 30 years. Already given 21 premiums.

    Please suggest, if it is beneficial to continue these policies?

    Both of us do not not have any pure term insurance plan.

    • Dear Meera,
      You may surrender your policy.
      1 – Can consider surrendering the policy.
      2 – Can consider surrendering the policy>
      3 – Can make it PAID-UP.
      But buy a term plan & then consider the above suggestions.

      • Hi Sreekanth,

        Thanks for your reply. Want to clarify why is it better to surrender the policy in top three cases rather than making it paid up.

          • Dear Meera,
            I believe that if you have paid less than 50% of all policy premiums, it is better to Surrender and re-invest in other better fin products to get decent returns.
            It is a suggestion. If you think that making PAID UP is a better option for you, kindly go ahead. But the main thing here it to get rid off these ASAP.
            As far s bonus is concerned, it is reduced by a factor called surrender value factor. Also, one should have paid at least 5 policy premiums.
            No bonuses would accrue in respect of policies surrendered within 5 years from the commencement date.

            • Sreekanth thankyou so much for your valuable advice, i will definitely work on getting rid of these policies at the earliest.

  • Hi Sree,

    I bought LIC Jeevan Shree(T-162) Policy in Sep-2011. The coverage amount is Rs 10.00 lakhs and half yearly premium is Rs 25500/-. I have paid premium upto Sep- 2015 and next premium is due on Mar-2016. Now, I want to go for online term plan with coverage of Rs 50 lakhs . Please suggest whether I should surrender the policy or make it paid-up policy.

    Also tell about income tax implication.

    Regards
    Mukesh K

      • Dear Sree,
        The policy term is 25 year and premium is required to be paid for 16 year.
        I have been paying premium half yearly from Sep-2011 and has paid 9 half yearly premium including Sep-2011. Currently I am working in Central Government and I am covered under group insurance. The coverage will increase to Rs 25.00 lakh after the implementation of 7th Pay Commission Report.
        In the view of above, I want to go for online term plan with coverage of Rs 50 lakhs. Please suggest whether I should surrender LIC Jeevan Shree (T-162) policy or make it paid-up policy. Also give insight on 5 policy premiums for tax purpose.

        Regards
        Mukesh K

        • Dear Mukesh,
          Kindly read it as 5 policy years.
          Kindly do not depend entirely on your employer’s health insurance alone. Will these health benefits get continued even after your retirement?
          Suggest you to buy a term plan first & then surrender existing policy.

          • Yes, central government employees can reimbursement the expenditure on health and medical facility even after retirement.

  • Dear Sreekant, Thank you for your informative article. Govt Regulator must step in to ensure that there are no mis-selling. I have purchased Bima Gold policy for 5 lakh premium i.e. 24817/- plus rider premium 500/- in 2012. So I have paid three premium i.e. in 2012, 2013, 2014. Now my premium is due to be paid this month. If I pay this premium of 25317/-, then I will get 75000/- i.e. 15% of sum assured next year in Nov. If I surrender this policy now the agents says I will get around 27000/-. What is your advice on this? IF I have to surrender this policy then What should I do with balance money? thanks again.

    • Dear Vivek,
      I believe that Guaranteed Surrender Value = 30% of all premiums paid – 1st year’ s premium, after paying 3 year premiums.
      Kindly recheck with your agent.
      I think this policy has ‘Special Surrender Value’ too.

  • Hi Sreekanth,

    Your articles have been very informative. I read your posts regularly.

    Confused with insurance and investment, I purchased Bima Gold policy in 2005. The Sum assured is 4.5 lakhs and the term is 20 years. It’s a money back policy and I received the amounts of 45K twice in 2009 and 2013. The annual premium is INR 14,737. The last premium was paid in Oct 2015.

    Apart from this, I’ve Amulya Jeevan term policies (took one 25L in 2007 and another 25L in 2013) and the sum assured is 50L for a period of 35 years. I’m considering buying another 50L term policy as I now feel that I’m under insured.

    Would you advice discontinuing/surrender of Bima Gold? Is it better to diversify and opt for another insurance provider for the new term policy that I’m planning (considering ICICI and HDFC Click2Protect from your earlier post)?

    Please advice.

    Thanks,
    Avinash

    • Dear Avinash,
      If you discontinue the policy, your agent will not get future commission(s) from that policy.
      You may consider making it a PAID-UP policy as you have already paid premiums for 10 policy years. You may consider buying a term plan from the same agent.
      You may buy new term plan from a company that you are comfortable with. Just disclose all the required information in the proposal form honestly.

  • Hi Sreekanth – info provided is detailed and provide good insight – thanks.

    I have a question related to LIC Jeevan Saral – i have been paying annual premium of 24000 for last 7 years and now want to surrender the policy as i should have never bought this product.
    Question – the next premium is due in Nov 2015 so would you recommend paying the said premium to LIC and surrender the policy or dont bother to pay the premium and surrender it directly ?
    I have other term plan so option of paid up can be ruled out.

  • Hi,

    I am Abhiram.

    I have LIC Jeenvan Anand and my income per year is 5 lakh and paying 28000 per year and for a a sum assured of -5 laksh. i am paying from 4 years till now

    After reading your article i do not know if i have to keep this policy or not? can you suggest.

  • i had taken 2 Jeevan Saral policy SA 5,00,000 & 2,50,000 for which i am paying premium of Rs 24020 / 12240 pa. I have paid already 8 / 2 yrs premium respectively . Tenure of the policy is 20 yrs. I will get as per LIC policy Voucher 16 lac at maturity.

    Please suggest should i continue the policies.

  • My fathr age 52,i want to take a term insurance for 10 lakhs to my father through an agent,kindly suggest me the best one,what about lic’s anmol jeevan -II?

  • Hi Sreekanth,
    I have read all yours article and Its very good for common people who purchase their policy blindly by hearing their adviser. Thanks for your effort.

    I am 26 years old and My income is only 10000 per month,I have purchased LIC jeevan rakshak policy but according to you its not good for saving purpose. I want to know best saving policy for me.Kindly reply.

  • Dear Srikanth,

    Iam 30years old, I have taken 25 jeevan Anand policies(Table#149 with profits and accident benefits) in 2013 for SA 64,00,000 with premium 2,00,000 PA . Upto now I have paid all premiums without fail.

    As per my LIC agent,I will get around 10,00,000 for every year starting from 2036 as my first policy will get matured in 2036 and I will keep on getting 10,00,000 for every year until my 25th policy gets matured i.e. in 2061.

    In between if I die then my nominee will get minimum of 64,00,000 and maximum 1.5Cr.

    Even after maturity of all policies, there will be a risk cover of 64lac is upto 100years.

    I have taken this policy by trusting my LIC agent(he is my relative),now iam little bit confused.

    Please advise.

    Thanks

    • Hi Khaja,

      Firstly thanks to Srikanth for an awesome article to enlighten people.

      I have analysed your policies, below is my opinion.

      if you are paying an amount of 2lacks pa, for another 21 years in any MF assuming an annual return of 15 % will fetch you 37lacks .

      Menas if you do this every year instead of 10 you will be getting 37 lacks , for more flexibility you can go for SIP even.

      Comming to insurance there are wide range of term policies available in market, opt for a good one which will give you 64L cover for a good tenure.

      If you are willing to save 2l on LIC ,your cover has to be more than 64L please recheck once. Normally it is followed ten times CTC.

      In my opinion dithc the existing JA policyies and opt for a term insurance.

      —
      Sandeep Chebrolu

      • sandeep – if you are paying an amount of 2lacks pa, for another 21 years in any MF assuming an annual return of 15 % will fetch you 37lacks .

        My doubt : i believe ,if khaja pays 2 lac/year or sip of 17000 every month ,then he will be getting around 2.6 cr in 21 years .i mean ,how you calculate so that he will be getting 37 lacs every year .please clarify .i have this big doubt as i am not getting proper answer from any calculation.

  • Hi Shreekanth,
    Very nice article.
    As I mentioned in my earlier query, I have 7 endownment policies with profit (table no 14) in 2010 each of sum assured 2L and total premium of 51k yearly. (paid 5 premium till now)

    Reading your posts on investment I have decided to surrender these policy and buy a new term insurance.
    in my case surrender value is @1.28L.

    In your above blog you mentioned that

    Recently IRDA has come up with new regulations on minimum surrender values for new traditional policies. The surrender value must be atleast 30% of the total premiums paid. After the 4th year it would be 50% and it can go upto 90% of the premiums paid in the final policy years.

    Is this new rule applicable in my case?
    is this new rule is not for with profit policies?

    Also on googling on surrender value i got below

    Guaranteed Surrender Value (for regular premium policies) will be as below. A) 30% of premium paid less any survival benefit already paid, if surrendered within 2nd Or 3rd Year. B) 50% of premium paid less any survival benefit already paid, if surrendered within 4th To 7th Year. C) 90% of premium paid less any survival benefit already paid, if surrendered in the last 2 years of policy , if term of the policy is less than 7 years.

    what is any survival benift ?

    Thanks and Regards,
    Deepali

    • Dear Deepali,
      New rules related to Surrender Value (both for linked ie with profit or non-linked policies) was effective from 1st October 2013.
      Kindly check with your agent or LIC regarding the exact Surrender amounts.

  • I hold an LIC policy & I wanted to pre-close it for some reasons. I was searching around net and landed here. From my search experience, I can say this is the best advise I have seen so far.
    Also, I can add to this for e.g. You have very long term insurance policies liek 20,30 years then other option is to reduce the maturity period from 20 to 10 years and then let it convert into paid-up policy. So that you can liquidate the amount faster.

  • Hi Sreekanth,

    I am having one Lic endowment plan with Monthly payment mode through ECS for past 7 months.
    Can you please help me to stop ECS payment and Close the policy.

    Really i dont know how to stop ECS payment.

    Regards,
    Krishnamurthy K

  • Only plus point in this policy is if death of policy holder occurs at any time (after commencement of policy), all the payouts will be given by company (as mentioned earlier) from the date of claim settlement.

    Please give your opinion about this policy…

      • Dear sir,
        Since I was in need of insurance plan which gives my money back with guarantee.That policy states that even death of policy holder occurs (when policy is in force) company will give all payouts as stated with guarantee….
        So I thought this policy has insurance as well as money back facility also.

  • Hello Sir,
    I read your article….its very useful for our future life. Some of the basic but very important points I wasn’t aware of while taking any insurance policy..thanks for explaing those.

    I would like to bring to your that I have bought Aviva’s new family income builder plan by march 2015. I have to pay Rs 52060 annually for next 12 years( upto 2026). Maturity year is 2027.
    From 2028 to 2039 (12 years) company will give payouts Rs 75750 every year+ Rs 303000 along with last annual payout….total i will get Rs 1212000 by the year 2039
    I am paying Rs 624720 to company…….I am getting very less returns it seems
    What can i do to stop this policy???

  • Dear Sreekanth,

    This is very insightful article on unnecessary Insurance policies, like many others I was also trapped in this when I was new in investment filed ( in 2007), I bought 2 ULIP plans, I realised in 2010 that ULIP plans are waste and I stopped investing in any more plans, and started building my MF portfolio through SIP, also invested in stocks for long term, and PPF and SSA scheme for tax purpose, but I have not discontinued by ULIP as whenever I think of doing this I feel that I am getting decent returns ( though I don’t need ULIP for Tax savings now) and I have already taken sufficient Online Term Insurance plan from ICICI Prudential, details of my ULP plans is given below, please suggest if I should continue or make it paid up:

    1. Aviva Sachin Century Plan ( Started in 2008 for 10 years, SA 1, 50,000, already paid 7 premiums , current value is 1, 18, 000)

    only 3 premiums are pending and I am getting a simple interest of 12% till date + I will get ‘loyalty addition’ of 6.25% of total fund value value if I pay all premium

    ( so suppose I pay all 10 premium my cost value is 1,50,000; assuming 12% simple interest rate I should get 1,68,000+ 10,500 ( 6.25%) = 1, 78, 500 ( 19% return ~ Simple interest)

    2. ICICI Life stage Assure ( started in 2009, 15 Years, Prem: 20k per annum, SA 2 Lacs, Prem Paid : 7)

    Currently I have spent rs. 1,40,000 in this policy ( all prem paid till date) and current value is Rs. 1,59,000 [ while units are not allotted from the premium of first year, as first year premium will go as a Guaranteed maturity addition and 80% value will be added in total fund value]

    So average i am getting 13.5 % return so far, if I pay all all premiums my cost would be 3 Lacs and I will get 3,40,500+16,000 ( 3,56,500) around 18% simple interest

    Assuming that these are equity oriented scheme and I have calculated conservative interest it may go up in long term, secondly I have already gone through the phase when entry load and policy administration charges are more, so now most of my investments will go in buying units.

    • Dear Rupesh,
      ULIPs issued prior to 2010 were very costly ones. Also, you have completed almost 60 to 75% of policy tenure for both the policies.
      So, you may continue with them. But do an ‘opportunity cost’ analysis, means if you surrender the units of both policies and invest in Equity oriented mutual funds for long term (depends on your financial goals), analyze if you can get decent returns over & above the expected returns from ULIP funds.
      I prefer investing in mutual funds, as they are more transparent wrt fund management, flexible, have high liquidity etc., Do think about these points before taking final decision. cheers!

      • Thanks a lot, I am planning to continue with first ULIP ( where only 3 premiums are pending) ; and will make the other ULIP as paid up ( where 8 more premiums to be paid). Do you have any mobile app where we can access these blogs ? Have you written any article on ‘long term’ and ‘short term’ investment/ trading tips ?

        • Dear Rupesh,
          I do not write articles on ‘trading’. As of now, we do not have a mobile app, however you may subscribe to our newsletter by submitting your email-id & name. You may follow Facebook to get regular Blog alerts 🙂

  • Dear Srikanth,
    greetings!!!
    i have taken jeevan Anand policy in 2008 for SA 10,00,000 with premium 72,752 PA (16 years). so fat i have paid all the premiums without fail. i have been told by my agent that at the end of the maturity i will SA + bonus + loyalty addition (if any) which is nearly 25 – 30 lakhs. in addition to this i will get coverage of 10,00,000 if i die.
    is this correct? so, can expect 25 – 30 lakhs in 2024?
    also i have added another policy in 2011 which is jeecan saral. SA 10,00,000 premium 48040 (16 years). my agent told me that i will get 20lakhs on maturity

    kindly let me know if these policies are worth continue?

    I am 35 years old, married and have 2 kids. i have bought a home (without loan). i have invested 15lakhs in a piece of land for kids future. i have 5 lakhs in fixed deposits.

    kindly advise.

  • Hi Sreekanth,

    I have taken endowment policy in lic on feb 2015. I am paying 2850 rs per month through ECS. now i feel that that policy is waste one. i have taken term insurance with hdfc click protect plus.

    Can you guide me how to stop ECS for the Lic policy, Is there any procedure to do that.

    Regards,
    Krishnamurthy K

    • Dear Krishnamurthy,
      You just have to contact your bank and ask them to stop the ECS payments to LIC. They will cancel the standing instruction they have put for auto-debit on your account.

  • Sreekanth,

    I recently bought the traditional Pension Plan from HDFC. It is called Personal Pension Plan Plus. I have paid 60000 as the first annual premium. It is actually 62100, inclusive all charges. This is actually a Life Insurance Plan sold under the name of Pension Plan. I was brain-washed by the agent that returns would be definitely 8% at least. But there is no guarantee for the same. The policy terms and conditions say that Reversionary Bonus would be added every year. But, it doesn’t say what %. Since this is traditional plan, my guess is that returns would be very low and hence not suitable for Pension after retirement.
    I feel it is not a good investment because the returns could be very low (may be around 4%). I have taken the policy for 25 years.

    I am still in the look-up period. Do you think I should continue or cancel it and invest the same money in MF to get better returns. Please advice.

    Also, please let advice if NPS would be a good option for retirement planning.

    Regards,
    Sudhakar S

  • since 2012.till now paid 200000 as premium for annual 50000. policy is max life gain.surrender value now told by max is 73000. two more premiums to be paid.policy term 25 years till 2037. should I surrender it and invest 73000 in MF and rest 100000 also in MF.I have other lic policy for 1200000. I can take term insurance.please advise.

  • yes I have life insurance of 1000000 but no term insurance.please suggest as to what to do with max life gain plus.

  • dear advisor what is the best option to me for max life gain plus policy with six year pay and 25 years term in which I already paid four instalments of 50000/-i.e 200000.Though when I come across your articles and blog I am thinking to discontinue with 67000/- as surrendered amount and invest in HDFC children gift fund lock in and invest remaining instalment 100000/- also in it to get better return for my six year son.

  • Hi,

    I have two policies one is Jeevan Saral & second one is Jeevan Anand.

    I want to surrender Jeevan saral & paid up the Jeevan Anand Policy.

    I want to know when i am taking the term insurance do i need to make any comments on my existing policies , as anyhow i will be closing it soon.

    Thanks,

    Dinesh

    • Dear Dinesh,
      If you have not yet surrendered the policies (that means if policies are still active), then do mention the existing policy details in your term plan proposal form.

  • Hi Sree,

    This is in continuation to your reply at page “best-top-equity-mutual-fund-sips-in-india” , i already have sufficient term insurance plan now, so my endowment policies are just meant for savings/wealth creation, i checked the information given by you above, but unable to decide :
    1.) I have one Jeevan saral (25 years term) with premium of 24K , started in 2011, so already paid 5 premiums(around 1.2 lacs), if i surrender, as per the details given by you above, i can get 90-100% of Money :
    – Is it okay to surrender in this case(Not getting any interest , rather am doubtful that lic will return me my full money.)
    – I didnt like the paid up option for this case, plz suggest.

    2.) I have one New Jeevan Anand(Table No. 165), which has so fame/name in Market, for this i have paid 2 years premium of 27K, term is 21 years.

    • Dear Prashant,
      If I am in your place, I will surely make Jeevan Saral plan a PAID-UP one.
      Jeevan Anand, you can just make it lapse or you can pay one more premium (3 policy premiums) and make it a paid-up one.

      Why do you want to compound your mistake. Yes, you have term insurance plans, then why do you need these duds. Invest these premiums in mutual funds (you can invest in debt funds too) and let the money work for you 🙂

      • Ok, advice taken.
        But why Paid up, i think surrendering is a better option.
        1.) If PAID-UP, RSA = 5/25*5lacs = 1 lakh, that i will get on maturity/mishappeing. Do you think 1 lakh have any value after 20 odd years !!! Surrendering will give 90-100% of premium value now itself viz. 1.5 lacs, So, seems SURRENDER is a better option here !! Plz suggest.
        2.)Same logic/calculation applicable for Jeevan Anand.
        3.) Why these LIC’s Jeevan Anand is so Hot in market, these are totally not acceptable to you 😉

        • Dear Prashant,
          Many of the policy holders hesitate to surrender the policies (even though its the best option in many of the cases), hence suggested you PAID-UP.
          If you are convinced with surrendering, just go ahead.

          Nice to know that you are very clear about TIME VALUE OF MONEY 🙂

          Let me ask you one basic question – according to you, What is meant by insurance ? 🙂

          • Thanks, as you agreed to my calculation and opinion of SURRENDERING :). As in my case i have term plan active, so “INSURANCE” which i will get with PAID-UP doesnt means a lot to me.
            Hoping above have clarified the sarcasm of you asking me about Insurance 🙂

            Thanking you again for doing such a nice work and making people aware about Money.

            I am taking your point of Surrendering,
            What will happen of the Tax benefit i took on those previous premiums, is that valid or do i need to pay it back to ITD.

  • Dear Sri,

    Thanks for such a nice blog. I have a question in my mind. I purchased one LIC Jeevan Saral policy in June’2012. Policy details is as follows-
    Premium-37300(Yearly)
    Tenure-20 Years
    Sum assured-7,75000
    Premiums paid till date-3, Total amount paid-1.11L

    1. Please suggest me should I continue this policy? I am not sure about the maturity amount of this particular policy.
    2. Can you please tell me the maturity amount of this policy?
    3. Also please tell me how much amount can I get in return if I surrender the policy now(before making the 4th payment)
    4. How much amount can I expect after making the 5th payment(I’ve heard there is zero surrender charge for Jeevan Saral after the 5th premium)?

    I’ll highly appreciate any helpful answer.

    Regards,
    Subir

    • Dear Subir,
      Suggest you to discontinue (paid-up) this policy immediately. Don’t do any more calculations now. Start investing the saved premium in mutual funds.
      Do you have term insurance? Do you have sufficient life insurance cover?

  • dear sir,

    i m 28 years old.

    i hv buy retirement & enjoy policy at 24 years of age.
    i hv paid 5 premium till date.

    what should i do?can i surrender the policy or is it good?
    CAN i invest this money in MUTUAL FUND? SUGGEST VERY CONFUSE….
    yearly premium – 50,000/- ( 25 yrs to 45 yrs) – 21 years
    invest in 21 years – 10,50,000/-
    return 46-70 years – 7250000 ( 72,50,000/24) = 302083/- per year
    risk cover – 25,00,000/- ( avg)
    70-80 year – no money given
    in 80 year i live – give 15,00,000/-

    SURRENDER THE POLICY?

      • thx sir,

        i m dicontinue this policy in which mutual fund invest for retirement purpose.
        monthly invest 4000/- through sip as per above guidence.

        which fund suggest for long term? ( 30 years)
        as per my knowledge i select below funds ( 1 equity & 2 elss)
        for tax saving purpose

        1) mirae asset opportunity – 1000/-
        2) axis long term – 1000/-
        3) reliance tax saver / hdfc tax saver – 2000/-

        ELSS FUND IS GOOD FOR WEALTH CREATION

        • Dear Akash,
          Before discontinuing the above policy, do check your total life insurance coverage. Is it sufficient? If not, kindly buy a term plan.
          You may consider investing in a balanced fund like HDFC balanced / ICICI Balanced fund instead of Mirae fund.

  • hi,
    LIC jeevan kishore (table no.102) premium 5000/- I bought it in 2010 for my 1 year old daughter only for saving. after read your blog i feel that its toal waist of money so i want to left it………. whats is best way……. and paid up facility available in this policy or not……….. pls suggest……

    • Dear Mr Choudhary,
      If you stop paying premiums, policy will become a PAID-UP one.
      Kindly understand the basics of life insurance. There is no need to take an insurance plan on child’s name.
      You as a bread winner and earning member of the family should have sufficient life insurance cover, so that if any unfortunate event happens, your family can claim the insurance monies and can continue the same standard of living.
      Suggest you to buy a good term plan at the earliest. Do not postpone! May I know your age and financial goals?
      Kindly read my article – “Top 7 best online term insurance plans in India“.

  • hi,
    i have money back policy 18000 premium 5 lac SA. its complete 10 years and i received 20% money back in December 2015. if i stop paying premium ( make it ad paid up ) after receive money in dec. what amount i received after 10 year (20year term)

    • Dear Prem,
      If you discontinue or make your policy a PAID-UP one, your insurance amount will be reduced proportionally. On maturity, you will get Sum Assured of Rs 2.5 Lakh + accumulated Bonuses of the first 10 years.
      Its better to come out of these kind of policies and buy a good term insurance plan.

  • Dear Sreekanth, 1.please let me know the procedure for making a LIC JEEVAN ANAND paid up.
    2. By making paid up when shall I receive the money back. My yrly premium is 12000 for 2 lakh cover for 20 years, completed 7 yrs.
    3. Which will be better making the policy paid up or surrendering . If surrendered what will be the surrendered value

    • Dear Archana,
      1 – If you discontinue or stop paying the premium then the policy will be converted to a PAID-UP one. I believe that the policy status can be checked online too.
      2 – You will receive the maturity payments on policy closure (after policy matures).
      3 – Since you paid 7 premiums, you may make it a paid-up one.

  • Srikanth,

    Thanks for your time in educating the people who falled into agent’s trap or relatives compulsion.
    When I am looking for options to get rid of my wife insurance policy who is house wife, I landed at your site.By looking at this post, earlier I was in dilemma but now I am seriously considering to get rid of my policies but thought of taking your advice before doing.

    My wife has Jeevan anadh policy which was taken on 2006 and we are paying annual premium about 15,000 for sum assured 3 laks..Policy term is 21 years..

    Now I want to get rid of this policy and invest the same amount in MF through SIP. Do you think it is good option?

    I am also holding same policy with same duration and paying almost same amount for same sum assured. Is it worth to get rid of both policies or just my wife? Planning to take term policy incase if i get rid of these policies.
    Appreciate your support

    Thanks..

    • Dear Ravi,
      Thank you for the appreciation.
      May I know if your wife is an earning member of your family?
      Do you have any other existing life insurance policies?

      • She is house wife.Apart from that two policies, I have another policy for my son and for that I am paying 40,000 per annum. Policy name is kopmal jeevan and sum assured is 5 lakhs and paying premiums since 2008.Please let me know if you have any questions..

          • Thank you srikanth for your time and suggestion..Appreciate that. Yes I already read about your article related to term plan. If we have read this 10 years back, we should not done this type of blunders. Thanks once again for the informative articles and educating the people with your valuable valuable suggestions.

            Thanks,
            Ravindra

  • hi,
    (1)thanks for advice…… in my two money back policies (18000 pa premium) who completed10 years….. i stop to pay premium its becomes as paid up am i right nothing to do anything…. my question is what amount i received after 20 year ( complete the policy).
    (2) in my latest policy i am paid two premius rs.36000. after three premiums (54000) if i surrender it i got 30% of 36000(two premiums) means 10800/- am i right………… if right i pay 18000 and received 10800 if surrender its………..pls explain its………..
    (3) and last i lost two premises……its a difficult tast to left it……

    • Dear Prem,
      I am unable to understand your queries.
      If you want to know the ‘surrender values’, kindly contact your agent or visit nearest LIC branch.

  • hi,
    SreekanthI have 3 LIC policy all are money back with 20 year paying term, my age was 29…two policys 10 years complete and one was take befor two years 2 premium paid…….. 18k premium for each…. what is good for me new money back policy i receive 500000 after every 4 year. I reinvest it 50k and add 22000 every fourth year…. and complete the policy or left to pay premium…… i am pay 18000+18000 only two premium till date.

    • Dear Prem,
      You may make the two policies (10 years completed ones) as PAID-UP.
      The latest one can be surrendered after paying your third premium.
      Before implementing the above suggestions, kindly buy a Term Insurance Plan with sufficient cover . Read my article “Top 7 best online term insurance plans“.
      Revert to me if you need any guidance.

  • Hi sir,
    Last month i purchased LIC New Jeevan Anand policy because Lic agent is my relative & he force to me purchase the policy. the policy value is Rs. 1400000-Annual premium is Rs.78000/- & my wife policy Rs. 1200000 – annual premium is Rs. 66000/-The both policies duration is 21 years After read your article i fell guilty my self i purchased wrong. Now what to do sir? shall i go policy lapse or i will continue to three years after that surrender the policies. Please advice.
    i have total policy- jeeven mitra double cover-one lakh (puchase 2002 &duration-21 years), jeevan anand -5 lakhs ( puchase 2009 &duration-20 years), new jeevan anand-14 lakhs ( puchase 2015 &duration-21 years)
    my wife have total policy- jeeven tarang-one lakh (puchase 2010 &duration-21 years), new jeevan anand -2 lakhs ( puchase 2014 &duration-16 years), new jeevan anand-12 lakhs ( puchase 2015 &duration-21 years)

    • Dear Rajesh,

      Yes, few agents do FORCE us to take Life insurance policies. Sad to hear that it has happened to you.
      Oh my God! You have invested in so many insurance plans..
      Is your wife an earning member of your family?
      Premium amounts are huge…
      If I am in your position, I will let the new policies lapse and book the losses.
      If you think the losses are huge, consider paying 3 premiums and then discontinue, make them PAID-UP policies (i believe you understand what is paid-up).
      Suggest you to read my article – “Top 7 best online term insurance plans.”
      Also, buy a term plan with required insurance coverage, before surrendering or making the existing polices paid-up.
      Revert to me if you need any guidance.

      • Thank you very much for your guidance sir.
        my wife not earning any money.i will buy online term insurance then make a paid up policy.
        All are very nice Article. good workout. all post are useful & clear so many doubts. Excellent thank you sir.

        • Dear Rajesh,
          If your spouse is not an earning member of the family, and if no family member is financially dependent on her, she may not require life insurance. So, consider surrendering/paid-up options for her policies.
          Thank you for your appreciation. Kindly share my articles with your friends.

    • Dear Mr. Rajesh,

      Please dont panic, ur relative has given u a good plan..

      your returns after 21 years for 14lakhs policy will be 1764000 + 1400000 = 3164000

      and even after maturity 1400000 insurance cover of yours will continue without any single paisa for premium. And the same will be redeemed to your nominee upon your death.

      One more thing, i pity that you hav taken Jeevan Tarang for 1 lakh sum assured only. Boss it was a 3 generation plan and could hv given good returns.
      firstly sum assured upon maturity, secondly the survival benifits @5.5% of the sum assured till the time you are alive, and third and last upon your death Sum assured + Loyalty additions paid to your nominee.

      As far as i see your portfolio is good. dont worry

      • Dear Rajesh,
        Above comment by Shyamkumar, is the one of the best examples of how some of the ‘agents/advisors’ mislead investors.

        Dear Shyamkumar,
        Kindly calculate the returns in percentage terms. Do not just give the maturity amounts.

        • hellow Shyamkumar,

          waiting for your calculation in % terms because i am learning form discussions. I am new to this site but found quit interesting.

          • Dear Aditya,
            I have observed that, some of the LIC agents just give generic statements and mislead investors. If we ask specific questions, they will just disappear. Let’s wait for Shyamkumar’s reply 🙂

  • Hi,

    I’ve LIC Jeevan Anand Police of 5 Lakhs sum assured and paying quarterly premium of Rs. 6800/- since Jan 2010. I’ve already purchased Max Life Term Insurance of 50 lakhs in Jan 2015. Now I want to surrender LIC policy. What is your suggestion?

    Regards,
    Samir Nigam,

  • Hello Mr. Reddy,

    Thank you for keeping all investors aware and educated.. i seek your advise..
    I have max life life partner plus limited pay endowment to age 75 plan- 20 pay..
    And already i’ve paid 5 premiums till date ..2011 being the first year.. when i called up the call centre they told me that i don’t have reduced paid up option in my policy…and the surrender value comes too less.
    i pay 50k premium every year, now i am bound to pay for 15 more years..
    is there a way out please suggest..

    Regards.

    • Dear Jai,
      When I had to surrender my ULIP policy in 2009, I had to visit a PVT Life insurance Regional office three times. In first two visits, they tried to convince me to stay invested.
      So, you can just stop paying the premium and your Endowment policy will become a reduced PAID-UP one. If you are confident that you can invest the amount (surrender value) in a good investment avenue, which can generate better returns (over and above the losses you make after surrendering), go ahead and do it.

      Thank you for your appreciation and keep visiting!

  • Hi Sreekanth.

    I appreciate your efforts to create awareness and giving us a very useful information in this space.

    I may need your advise on getting off my bad insurance, which i have taken of sheer ignorance to avoid tax.

    Is it Ok? , if i mail you at (sreekanth@onlinefinancialplanner.in) with all details..

    Thanks
    Chandu

  • Hi Sreekanth,

    Liked your post !
    The ‘IRDA’ link in the 2nd point(Surrender the policy) of the above ‘Available options’ of the article leads to a different wiki page, rather than to the regulatory body’s Wiki. Hope this will be corrected.

    Thanks

  • Sir,
    Can you help me in identifying right insurance plan ( esp term insurance)? Thank you.

  • Hi. I have taken a money-back policy from LIC in 2010. How to make it paid-up? Is there anyway that i can check the status online?

    • Hi Amrita. If you had decided to make your policy as a paid-up then do not pay any future premiums. LIC will convert the policy into a REDUCED PAID UP one. If you have enrolled your policy on LIC Website then you may check the policy status on LIC website. It will be updated as REDUCED PAID UP.

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