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POSTED BY ON January 26, 2013 12:06 pm COMMENTS (2)
Hi,
My father has taken Jeevan Mitra triple coverage policy in Oct 2000 when he was at age 48, for Sum assured 80k and paying primium Rs 2070 /- quarterly. Policy term is 15 years wich will be matured in 2015. My father age is 58 now. Till now he has paid 1,01,430 towards the premium.
Can you please suggest what should be done for this policy?
Should he continue or surrender it?
If it should be surrendered, what would be the value he get?
Thanks,
Anand.
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Dear Anand, as the maturity term is very close just 2Y, the time frame to earn any meaningful return after surrender is not available, hence ask your father stay to invested.
Thanks
Ashal
This is the formula for
Special surrender value =
{Basic Sum Assured X (Number of Premiums Paid/Total Number of Premiums Payable) plus total bonus received}X Surrender Value Factor.
Surrender Value Factor =0.7728 (12 out of 15 years paid)
I usually recommend surrendering. However in this case the premium is quite low and most of the policy term is over. So you have a choice of surrendering (ensure he has enough life insurance if he is still working) and investing elsewhere or carry on till the policy is over.
In any case the annual premium will only be a small portion of total investment necessary for other goals. This is the reason I feel it doesn’t matter much whether you surrender now or not. But why continue in a bad investment especially after you realize that it is bad?
Of course if you do surrender and use the premium and surrender value to invest in instruments that offer better returns (judicious mix of equity and debt) then it will make a difference to the sum accumulated.