Hello,

My father is currently holding two LIC policies since last 2 years. Following are the relevant details:

Policy 1 – Endowment Plus

S.A. = 4,65,000/-
Premium = 3500/- payable monthly
Term = 10 years
Start date = 21/01/2011

Policy 2 – The Whole Life Policy – Limited Payment

S.A. = 2,50,000/-
Premium = 1565/- payable monthly
Policy Term = 40 years
Premium payment term = 15 years
Start date = 22/01/2011

I have managed to convince him that these plans are no good and he has agreed to close it.

I need advice on what would be the best option to get rid of premium payments? I have narrowed down to these:

For policy 1:

Option 1: Stop payments and surrender immediately

Premium paid = 29 months * 3500/- = 1,01,500/-
Time elapsed = 2 years and 5 months
Surrender value = zero
Total Loss = 1,01,500/-

Option 2: Complete 3 years and surrender

Premium paid = 36 months * 3500/- = 1,26,000/-
Time elapsed = 3 years
Surrender Value = 30% of (24 months * 3500/-) = 25,200/-
Total Loss = Premium paid – Surrender Value = 1,26,200 – 25,200 = 1,01,000/-

Option 3: Complete 3 years and convert to Paid Up

Premium paid = 36 months * 3500/- = 1,26,000/-
Time elapsed = 3 years
Money received at end of term: Premium paid + some interest (not sure).

I have not calculated for policy 2, but I am guessing it would be something similar.

With only 6 months remaining for completion of 3 years, what do you suggest I should do to get rid of these policies?

Thanks!