Is it good to surrender my Traditional policy as I feel I have sufficient term insurance coverate

POSTED BY Venkateswara Rao K ON April 23, 2013 2:06 pm COMMENTS (2)

Hi Friends, 

I am covered with term insurance of good amount which almost 10 times of my current income. I have traditional kind of endowment policy, for which I am paying premium of around 30K per year and have to pay another 14 year and since then I will be getting money back every year till I become 80 years old. 

I am just thinking of surrendering this policy as coverage is much less when compared with the premium I am paying for it.

 

I would like hear your suggestions on the same. 

 

Thanks & Regards,

 

venkat K

2 replies on this article “Is it good to surrender my Traditional policy as I feel I have sufficient term insurance coverate”

  1. Ashal Jauhari says:
    April 24, 2013 at 11:03 pm

    Dear Venkat, 10 times is still on lower side. Please increase it first before surrendering the old traditional plan.

    thanks

    Ashal

    Reply
  2. Free Financial Calculators says:
    April 23, 2013 at 2:19 pm

    10 times is still on the lower side. You probably need a little more.

    Reg. the other policy, you could stop paying premiums. You could either make it paid-up or surrender it.

    You can use this calculator to decide which option to choose:

    http://freefincal.wordpress.com/insurance-policy-surrender-value-paid-up-value-calculator/

    My take is:

    say you get X amt on surrending
    and get Y amt on maturity by making it paid-up
    To get Y by investing X you will need a post-tax return of 6-7% (above calculator will help)
    So you might as well stop premiums, make it paid-up and collect Y on maturity.
    You will have a little (reduced) insurance coverage as well

    Reply

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