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What is the best way to stop an existing LIC policy?

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12 Sep, 2021 by  kushal bhansali

Let me start by thanking all of you for this service and all your valuable inputs


my father has 19 (yes, that number is very high and debatable) LIC policies viz Jeevan Saral, Jeevan Anand, Jeevan Mitra and Jeevan Umang


I have stopped the premium payments (after getting adequate Term Insurance) for these policies and used the funds for another investment now. The premium paying term ends in 2032 and I have already paid the premiums for 10 years. (Total premium paying term is 20 years)


I believe that these products are a drain and we shouldn't pay any more premiums, but considering I am halfway through the terms, please answer my doubts -

What is the best way forward? Should I continue paying the premiums? What happens to the paid premiums if I don't continue paying? What is the best way to get that money back?



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Basics of Insurance

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15 Sep, 2021

Dear Kushal,


The best way to approach is to surrender the policies if you already have adequate term cover. All Moneyback and endowment plans have surrender value on payment of premium for 3 years. Since the premiums have been paid for 10 years you will get the surrender value as per the surrender value factor mentioned in the policy document. In addition to surrender value the insurers pay certain portion of the accrued bonus towards these policies.


You will not receive the full amount of premium paid, but atleast 60-70% of the premiums paid excluding taxes. You can approach the nearest branch with the policy details to get the information about surrender value.


If you have any follow-up questions, please feel free to post here.

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15 Sep, 2021
kushal bhansali
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15 Sep, 2021
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17 Sep, 2021

Dear kushal

As you have already paid 10 year premium hence My recommendations

1. Surrender all jeevan Saral because these can be surrendered after 10 tear without any loss . Moreover , jeevan saral is a controversisl product and does not offer amy additional benefit to continue .

2. Other three products sre good with taxfree return of approx 4% , hence continue . LIC is still good option for taxfree returns alongwitj life cover . Jeevan Anand and jeevan umamg has guaranteed whole life cover .



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17 Sep, 2021
kushal bhansali
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19 Sep, 2021

Dear Kushal

All plans except Jeevan Saral are good and premium payment is recommended . In market of today , 4% tax free yield is far better to balance your portfolio .

You will loose over 30% of your capital if you surrender .


Shailesh

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