Advice needed to surrender my existing LIC policies

POSTED BY Palanisamy ON January 6, 2012 9:11 pm COMMENTS (11)

Hello Friends,

I have invested in three 3 polices for self + my wife and 1 policy for my child. But now i realized to surrender 1 or 2 polices to make way to invest in MFs or SIP or PPF. I know this very late, but now i have to make some hard decision. Please advice me.

Invested Polices:
Jeevan Tarang – 3L – 15yrs (paid for 4yrs) – SELF – YRLY
Jeevan Anand – 3L – 21yrs (paid for 4yrs) – SELF – YRLY
Jeevan Anad – 5L – 35yrs(paid for 5yrs) – SPOUSE – HALF YRLY
Child Future Plan – 7L – 18yrs (paid 1yr) – CHILD – YRLY

Could you please kindly help/guide me to surrender any of the above polices? Also advice me to invest for my child future and investment options for future.

Thanks in advance,

11 replies on this article “Advice needed to surrender my existing LIC policies”

  1. Dear Palanisamy, please continue with 1500 Rs. VPF contribution but as & when your cash flow permits, increase your SIP amount in the 2 funds.



    1. Palanisamy says:

      Well said, Ashal. I will consider this as well.

  2. Dear Palanisamy, Initially you may enroll for 3Y SIP in the choice of your funds or suggested by me. Review the performance after 2Y & decide to continue or switch to other funds based upon the review at that time.



    1. Palanisamy says:

      Thanks for your valuable suggestion, Ashal.

  3. Dear Palanisamy, As the insurance needs are taken care off by the proposed Term plan itself. the insurance part of your 2 policies is meaningless now. Regarding the Investment part, the actual return to you ‘ll not be more than 5-6% at the end of term.

    Again be ready to lose a sizable amount of your paid prem. money due to heavy surrender charges. In my view – surrender now & invest all the money in one lump sum to HDFC Top 200 fund. As the money is to be invested for 15-20Y term, I’m asking for lump sum investment.

    If possible to you, please initiate SIPs of at least 2K each in HDFC Top 200 fund growth option & Quantum Long Term Eq. Fund Growth option.



    1. Palanisamy says:

      Thanks a lot Ashal. I will definitely consider your advice and plan my investment accordingly. I will come to this forum with investment update 🙂

      One final advice, how many years i should invest in SIP initially (10yrs??) Also i am contributing Rs.1500 pm towards VPF in my company. Can I stop that and put that money into SIP?

  4. Dear Palanisamy, as only 1st year prem. has been paid, you have to forgo it right now. if you opt to make this policy paid up after paying 2 more prem. still you ‘ll be at loss. Regarding the surrender or making paid up policy, please do note, for 2nd & 3rd prem. only ‘ll be consider to assign a surrender/paid up value & it ‘ll be around 30% of the paid prem. (2nd & 3rd year prem.).

    Hence treat this exercise as a teaching for yourself. Now onwards start investing those 35K amount yly either into PPF account of your own or for your kid.



    1. Palanisamy says:

      Once again a big THANKS for your prompt reply. It would be great if you advice on other three polices as well, since all three are in 3 years premium paid state.

      Apart from 35K in PPF, I plan to do some investment in SIP as well (HDFC Top 200 (G)) for my kid. Please give your tips on this. How many months I should opt & investment amount? I plan to put Rs.1000 as an initial investment on SIP.


  5. Dear Palanisamy, First of all I congratulate that you are realizing your mistake & ready to correct it. First of all please purchase a Term cover for yourself of at least 1 Crore Rs.

    Please purchase an online term cover be it from Aviva or Kotak or Icici, or HDFC or Aegon Religare (the insurer with which you are comfortable).

    Once that term cover is active, start thinking on surrendering or closing these policies.

    1st policy to be dropped is that child future plan.

    Please purchase a term plan right now & come back to this forum.



    1. Palanisamy says:

      Thanks for the prompt reply, Ashal.

      I will definitely consider your advice and buy a term plan right away. On side a note, i have paid only one premium for child future plan, can i surrender this policy now itself or don’t pay premium after 3 paid premiums(after 3yrs) and its become paid up policy.

      Please advice what should be the right approach on closing child future plan.

  6. Palanisamy says:

    Pre. that are paying for the above policies

    1. Jeevan Tarang – 15k/yr – 3L – 15yrs
    2. Jeevan Anand – 21k/yr – 3L -21yrs
    3. Jeevan Anad – 6k/h-yr – 5L – 35yrs
    4. Child Future Plan – 36k/yr – 7L +bonus

    Personal Background:
    – 29yrs, Married and working location is Bangalore. I have 4months girl baby
    – My annual income is around 11L and i have monthly exp of (12K house rent + 13K exp) 25-30K per month

    Apart from that I contributing 2K as a VPF in my company itself.and 50K in MF with 3yrs locking period(its going to exp this year)

    Please kindly give your advice, I have to plan well at least this year on wards.

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