I was searching the web to find how worth is to cancel an existing LIC policy. But canceling a LIC policy seems to be major loss as discussed below in one of the forum.
We should never suggest surrendering an insurance plan as the surrender options always deduct the first year premium you've paid, and statutorily an insurance company need to only return 30% of your balance premiums paid plus all bonus accrued till that date, back to you, hence it would turn out to be a major loss as far as the investment you've done in that plan is concerned.
A more viable alternative is for you to check the rate of bonus that have been accrued into your insurance plan over the last 3-4 years and decide on whether you are satisfied with the returns. If not, always go for an option to make your policy "Paid Up".
When you make a policy paid up, it means you just ask the insurance company to reduce your existing life cover to a value corresponding to whatever premiums you have already paid. You will not be payin further premiums into that plan anymore, but your insurance cover will run the entire term of the plan, albeit at a lower sum assured, while at the same time freeing up your 15,000 bucks you have been investing every year, so that you can re invest that money into a more financially rewarding money instrument.
References:
http://www.xboard.us/showthread.php?t=144822&page=2
Sunday, February 10, 2008
Surrender / Cancel of LIC policy ?
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Surrender value is payable only after three full years premiums are paid to LIC. More over if it is a participating policy the Bonus get attached to it as per prevalent rules.
Surrender of policy is not recommended since the surrender value would always be proportionately low.
Should you decide to go in for another insurance at this stage further insurance would be available to you at a much higher premium because your age would have advanced since taking out the earlier policy.
Therefore retention of earlier policies and continuation of all policies without allowing them to lapse is the best strategy for continuing life insurance protection.
I just surrendered by 10 lacs policy, 5 years old for Rs.1.7 lacs (I paid Rs.2.5 lacs as premium). And also took a Rs.1 crore term insurance for a premium of just Rs.10k per year)
http://www.bharatinvestor.com/2010/11/how-to-surrender-my-lic-policy/ has the steps to surrender your lic policy.
which policy u got 1cr insurance for just 10k per year?
Hi, You can get Rs. 1 Cr insurance by paying few bucks (say Rs. 10k to Rs. 20K) in term insurance policies. In this policy you get higher sum assured at lower premium. These are non participating policy means at the end of the policy period you will not get any maturity benefit. Term Insurance considers insurance as a pure expense. According to me it is best way to buy term insurance & park remaining funds in other investment options like bonds, gold, shares & MF etc.
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