lic policy surrender now or wait?

POSTED BY alpesh pancholi ON March 5, 2012 1:35 pm COMMENTS (4)

hi all,
i asked a question regarding lic endowment policies surrender and got good responses from you with calculators. so i decided to surrender my and spouse’s policies. for that i contacted my agent, he advised me to continue policies for 2-3 yrs more. i have paid 4 premiums till date and getting only 35% as surrender value. if i continue 2-3 yrs more then i will get 70% of what i paid.
little bit confused..
please reply with calculations
thanx

4 replies on this article “lic policy surrender now or wait?”

  1. Which policy is this ? It might be true only incase of JEEVAN SARAL , but in others , just paying 2-3 more premiums does not guarantee 70% of Premiums

    1. alpesh pancholi says:

      @ manish
      i have endowment policies and jeevan saral also..
      in jeevan saral there is no surrender value..u have to pay for 10 years and after that u can withdraw ur money with bonuses irrespective of ur policy term. i personally inquired at lic branch.

      1. Dear Alpesh, please contact LIC office for exact surrender values at present & after 3-4 years.

        In any case, your first year prem. ‘ll not be considered for surrender value, so in effect, you w’d have paid 8 prem. but the calculation ‘ll be made for 7 prem. & accordingly you ‘ll get 50 or 60 or 70% of those 7 prem. It’s up to you to decide but first contact LIC for the exact surrender values.

        Thanks

        Ashal

  2. I doubt if that statement is true. IF the statement is TRUE then it definitely makes sense to pay the next 3 premiums but how does the agent say you will get 70% back. Is there a calculator? Is he assuming future hefty bonuses. I really doubt the agent’s statement. Ask the agent to show how they arrived at that number.

    Calculations:
    Rs. 100 premium paid for 4 years; 35% gotten in start of year 5 = 140. Present Value is 140.
    If you contribute for 3 more years and get Rs.490 at start of year 8 then for this cash flow to have a Net present value of 140 the discount rate is 52%. Which means that if you get 140 today and invest it in some avenue for 52% for 3 years you will get 490 in 3 years time. We know this is impossible, Thus taking the payout after 3 years makes sense.

    But the above is pure numbers alone. You need to ascertain how you will be able to get that much money back just by staying for 3 more years (until the policy is maturing by then!!)

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