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

    thanks

    Ashal

  2. 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

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