Surrender v/s Paid-up – which is better option for your old insurance policies?

Do you want to get rid of your old money back insurance plans, but are confused if you should “surrender” or make it “paid up”?

Today I will explain which one is the best option amongst the two.

Surrender vs Paid-up option in Insurance policies

All those assured insurance plans which your parents made you buy from your friendly neighbourhood uncle is nothing less than a high premium low return policies with not more than 1-5% CAGR return.

These policies don’t provide enough life insurance cover neither they create enough wealth for you for your long term goals like children education, child marriage or retirement and on top of that, these policies have pathetic returns value if you want to close them before maturity and take back your money.

Mainly there are two ways to discontinue these insurance policies which are –

  1. Paid-up Policy
  2. Surrender Policy

What is “paid up” option?

Under this option, if a policy holder does not close the policy, but stops paying any further premium. However, note that this option is generally applicable only after one has paid for at least 3 yrs. (however, check your policy wordings for exact years)

The amount which you will receive at maturity will be reduced, in proportion to the premiums paid. This sum assured is called the paid up value. It is calculated using the following formula:

Paid up value = Original sum assured x (No. of premiums paid / No. of premiums payable)

Example – A traditional insurance policy with sum assured of Rs. 10 Lakhs for 20 years with a premium of Rs. 30,000 p.a. paid for 8 years. Let’s find out what will be its paid up value if one wants to stop paying further premiums.

Paid up value = 10,00,000 * 8/20 = 4,00,000

At a high level, the numbers don’t look back. You will get 4 lacs, but you paid just 2.8 lacs overall, however, remember that you will get this 4 lacs after so many years and you will lose the purchasing power because of inflation.

You can simply say that real worth of Rs. 4 lac received after 12 years is Rs. 1,58,000 today, taking inflation at 8%.

Therefore, if you are choosing policy paid up option, keep in mind that converting the policy into a paid-up policy will lock your money for the remaining term of the policy and also, actual worth of the amount, which you will receive in later years will be very less if the maturity of the policy is very far from now.

What is “surrender policy” option?

Under this option, you close the policy completely and take back your money. The money you get will be some percentage of your premiums paid minus the first year premium. And this percentage increases depending on how many years the policy premium has been paid.

A policy generally acquires any surrender value only after 3 yrs of premium payment, which means that if you choose to surrender your insurance policy before 3 yrs, you lose all your money and don’t get back anything.

Note that the surrender value starts with 30% and goes up depending on the number of years you have paid the premium.

Following is an indicative table which shows the surrender value as a percentage of premiums paid

[su_table responsive=”yes” alternate=”no”]

Time of Surrender % of premium paid – first year premium
After 3 years 30% of premium paid
After 5 years up to 8 years 50% of premium paid
After 8 years 65% of premium paid
Last 2 years to policy maturity 90% of premium paid


This percentage can change from company to company and depends on factors such as the type of policy. Every policy brochure mentions details about surrender value but, it is not compulsory that all the companies mention this percentage which is also called the surrender value factor in their brochures.

Example of surrender policy

Mr Pratik has bought a traditional insurance plan of 20 years with a sum assured of 6 Lakhs premium amount is Rs. 20,000 per year. After paying the premium of 6 years, he wants to surrender the policy.

Surrender Value = 50% of (premium paid – first year premium)

= 50% of (120000 – 20000)

= 50% of 1,00,000

= Rs. 50,000

You can see that he will just get Rs 40,000 from surrendering the policy even if he paid Rs 1,20,000

flow chart for surrender vs paid up insurance policy


When to choose “Surrender” and “Paid up” option?

Surrendering a policy is suggested when

  • You are not able to pay the premiums
  • You need money for some reason
  • When remaining number of years in policy is more than 8-10 yrs

This option is suggested because you still have many years left and you can pay the same premium amount in a better product which will do wealth creation for you.

Making a policy paid up is suggested when

  • You don’t need money but don’t want to pay further premiums
  • When you don’t want to pay premiums, but still want the policy to run
  • When your policy maturity is very near (2-4 yrs)

Making a policy paid up is generally not suggested, but a lot of times, investors are not able to take the pain of getting the reduced amount from their policy and feel like “they will get something in future”, however considering “time value of money“, it’s not a great option.

How to deal with the emotional part “I am facing so much loss”?

In both the options, there will be a loss for sure. Money back insurance plans are designed to give low yields and penalize you if you quit in between.

I think dealing with closure of insurance policies is more of a psychological battle You know you have got a wrong product and its bad for your future, but people can’t deal with the fact that they are facing so much of loss – “I paid 8 lacs, and I will get back only 4 lacs, I will lose 4 lacs”

Note that if you consider TIME VALUE, things will be easier to decide.

If your friend borrows Rs 100 from you and returns you Rs 110 after 10 yrs, you are not in profit, you are actually in LOSS. Because you could have created Rs 250 with an alternate investment and now you just have Rs 110, that’s Rs 140 loss.

Just looking at it from absolute numbers point does not make sense.

For example, imagine a sum assured of Rs 10 lacs with a yearly premium of approx. Rs 53000 per year. Now if a person has already paid 5 premiums and wants to surrender the policy, they will just get back around Rs 85000 (assuming 40% of 4 premiums, as one premium is deducted). The immediate loss of mind is for Rs 1.8 lacs (paid 2.65 lacs and getting back 85,000)

This is a tough situation for the mind and very tough to handle. A person feels why to take a loss when one is not recovering the amount paid also and just continues the policy till the end. The person will get back anything between 15-18 lacs, depending on the bonus amount declared.

This translates to only 5.69% and this the best case (it will get better if you die early after taking the policy, but I am sure you would not like it)

Now if the same person reinvests the same 85,000 along with Rs 53,000 premiums yearly into some equity-based products like equity mutual funds or index funds, even if assume a modest 12% returns which have happened in past, the wealth one will have will be 24.5 lacs and the IRR will be approx. 7.4% of the whole scenario. This second option also gives you better liquidity and exit option whenever you wish to get money.

How does a “Householder Insurance Policy” work? Features and benefits !

In this article, we will see how you can protect your home structure and belongings from natural and man-made disasters. We are talking about “Home Insurance” Policies.

We all invest our hard-earned money in buying our dream home and our lives revolve around it. Unwanted natural disasters and man-made threats can threaten the security of our home and its belongings and can cause surprise monitory losses.

what is home insurance policy and what are its benefits?

We have all heard about all kinds of insurance policies like term plan, health insurance, car insurance etc, but very few people have knowledge about “Home Insurance Policy” or also called “Householder insurance policy” . Before I explain more on that, let’s see what are some of the real-life threats and real-life incidents where people have lost their homes and belongings

Example #1 – Burglary

As per this times of India report, burglars broke into 4 houses in Ghaziabad on February 27,2019 and took valuables worth Rs 20 Lacs. Among the 4 houses, one of the houses was just 500 m away from the police chowky and burglars took jewelry and cash worth Rs 500000.

burglary in India

Example #2 : Fire

As per this report, on January 4, 2018, Four people died after a fire broke out in Maimoon Building that housed residential complexes in the suburban part of Marol in Mumbai. Besides the four dead, five people were injured in the accident.

Fire destroyed lives of people in Mumbai

Example #3 : Floods

To give you a recent example of a flood disaster which took place in Kerala in August 2018. Around more than 400 people lost their lives and almost everyone lost their homes and belongings.

August 2018 flood in Kerala

Example 4 Earthquake :

Nepal Earthquake which happened in April 2015 killed almost 9000 people and injured 22000 people. Total damage of Rs 1000 crores USD (which was 50% of Nepal’s Nominal GDP).

Nepal Earthquake April 2015

Can you see from the above examples, that these threats are real and it can possible happen to anyone in real life (even though the probabilities are quite small).

What is Householder Insurance Policy?

Householder insurance policies are policies, which protects the home-owners against damage and losses that affect their property and belongings. The exact terms of coverage varies from policy to policy; however, most insurance policies cover perils like hail, thunderstorms, fire, and theft.

Many policies also offer financial assistance if a homeowner must be temporarily displaced because their home has been damaged. Look at this video below which explains it in a crisp way!

What all is covered under these policies?

The insurance for your home can be broadly divided into 2 parts :

  1. Structure Cover – This is for the structure of your home. The compensation under this cover will be paid to repair damages to the structure caused by specified natural and man-made calamities.
  2. Contents Cover – This is for the possessions you have inside your home. If these are damaged or burgled, then the insurance covers the loss you incur for the same. You can take either one of these covers individually or opt for both to make sure you are covered comprehensively.

Here are some of the companies in India, which offers these Householder Insurance Policies. (Please do not consider this as a recommendation list).

Benefits of these policies

1) Protection against earthquakes, floods.
2) Cover against terrorism.
3) Cover against fire and allied perils.
4) Protection against cyclone, storm, hurricane, etc..
5) All risk jewelry cover.
6) Additional rent for alternate accommodation.


What all is not covered under this policy?

  • Loss, destruction or damage caused by war, invasion, an act of foreign enemy hostilities or war like operations.
  • Loss or damage caused by the insured’s and/or insured’s domestic staff direct and/or indirect involvement in the actual or attempted burglary or theft.
  • Willful destruction of property.
  • Cash, bullion, paintings, works of art antiques, mobiles and laptops
  • Electrical/Mechanical breakdown
  • Cost of the land.
  • Co-operative societies cannot take long term policy for the entire society building.
  • Under construction property.

5 Reasons why you should buy a householder insurance policy?

Here are some of the reasons why to buy a home insurance policy.

    1. Natural Disaster can strike any-time and anywhere :
      Every year, India loses more than 9.8 billion due to various disasters. Though you can’t control natural disasters, through home insurance you can really protect your house against natural disasters or ” Act of God”, such as cyclone, earthquake and flood.
    2. Man-made risks cause a lot of damage :
      Despite the latest safety equipment’s, man-made threats like burglary, riots, terrorism, etc… are still prevalent. While not all insurers cover these losses, you can get extra protection in the form of riders.
    3. Lots of valuable items :
      Apart from its structure, this policy will cover the contents of the house such as domestic appliances, furniture, audio & visual appliances etc….
    4. You may require relocating to an alternate place :
      Relocating to an alternate house happens in case of a total loss of the property. Till the time your home is being reconstructed, your home insurer will cover your additional rent.
    5. Buying the policy for a longer period of time :
      Every year renewing your home insurance policy can become a very tedious task for you since you may be very busy with other responsibilities in life. Many insurers offer longer duration policy for 5 to 10 years straight in one go. It is a cost-effective and hassle-free way of staying insured.

Can I buy this policy If I stay in a rented house?

Both the Owner of the house and renter can buy this policy. There is just a basic difference between both. Let’s see what it is?

In this type of insurance, the home owner either insures the structure or contents (belongings of his home) or both. In this type of insurance the renter insures only his contents or belongings in this rented house.

The structure of the house is insured by the owner of this house


Example of a real-life House holder Policy along with premium break-up

Below images shows the detailed structure of the policy with the premium break-up of one of the known Home Insurance Policy. Details of the cover are as follows :

HDFC ERGO Home Insurance policy structure

HDFC ERGO Home Insurance Policy Premium details

  • Age of the property not more than 30 years
  • Type of ownership – Owned
  • Insurance required for my Flat /independent house
  • Policy Tenure – 5 yrs.
  • Risk cover for structure & content
  • Type of plan – Fixed sum insured
  • Sum insured for Structure – 50,00,000
  • Sum insured for declared content + Burglary cover for content – 15,00,000 (detailed description below).
  • Total premium payable (including 18% GST) for 5 years is Rs 34,825.

Conclusion :

I think you will agree with me, that we have almost no control of these natural & man-made disasters. The best we can do is be alert and prepare ourselves by insuring that we secure our belongings and structure of the homes.

Also, these policies should be preferred more by people who stay in an earthquake or flood sensitive zone and who do not stay in a secured society and vicinity. I understand that the chances of these risks which these policies cover are quite small, but then it’s up to you if you want to get these risks covered or not.

Do you think buying these householder insurance policies makes sense?

Please share if you feel it makes sense to purchase these policies? share in the comments section below!

Want your Insurance Claim to be Processed? Link your Aadhaar/PAN asap!

As per IRDAI, the insurance regulator – it is now mandatory to link your Aadhaar and PAN number with your insurance policies. Though this linking process does not have a deadline right now, its advised to act fast and complete this action asap to avoid any last minute rush and issues which you might face at the time of renewal or claims.

Note, that those investors who still don’t have PAN , have an option to submit form 60.

Why to link your adhaar and PAN with LIC and other insurance policies

How to link Aadhaar & PAN in your LIC policy?

If you have any existing life or health insurance policies, you should link your Aadhaar and PAN soon.

As most of the investors have LIC policies, I am covering the online and offline process for LIC policies right now in this article and will give the links to update the Aadhaar for some other companies as well.

Online Process for updating Adhaar in LIC policies

If you want to update your Aadhaar in your LIC or any insurance policy, the first criteria is that your active mobile number should be linked to your Aadhaar number, so that you can generate OTP which is necessary for the registration process.

Here are the 3 steps you need to follow

Step #1: First of all visit this dedicated link from LIC’s website

Step #2: Fill the details like your

  • Name
  • Date of birth
  • Email ID
  • Aadhaar number
  • PAN number
  • Policy number
  • Aadhaar registered mobile number

and then click on generate OTP. Here is how it looks like.

link adhaar and PAN with your insurance policies

Step #3: You will get an OTP on your mobile, which you need to enter on the site and click on submit. You will see the massage of successful registration for Aadhaar linking with LIC.

It might take few days to link your Aadhaar number with your Policy. Once this linking process is completed after verifying your details from UIDAI, you will be informed via SMS/e-mail on your registered mobile number or mail-ID. You can also watch this video to know the process.

Online Process for updating Aadhaar in LIC policies

You can also have an option to visit your LIC branch and fill up the offline form to link your adhaar and PAN with your policy. Make sure to take an acknowledgement letter once you complete the process.

How to link your Aadhaar and PAN with non-LIC policies?

Each and every insurance company has implemented the solution of linking Aadhaar with policies and you will find a dedicated page on their website. Just search for “Aadhaar + PAN + Linking + <<enter Insurance company>>” in google and you will surely get the link for completing the Aadhaar linking process.

However we are putting up a small list of some insurance companies and their respective links to make it easy for you.

[su_table responsive=”yes”]

Sr. No. Insurance Companies Link to update Aadhaar and PAN
1 ICICI Prudential
2 SBI life insurance
3 HDFC standard life insurance
4 Max life insurance
5 Bajaj Allianz life insurance
6 Reliance Nippon life insurance
7 Tata AIA life insurance
8 PNB Metlife India insurance
9 Apollo Munich health insurance company limited
10 Star health and allied insurance company
11 Religare health insurance company
12 United India insurance company


Note that this takes just 1-2 minutes of your time, but its an important thing to complete. If you still have any doubt regarding this linking process you can leave your query in the comment section.

Travel Insurance in trains in India by IRCTC has became mandatory

In next 7 min, you will read how you can secure your family with just Rs 1. I am going to teach you that. IRCTC has made it compulsory for every train traveler to take a Personal Accident Insurance Policy which has been applied from September 2016.

Railway minister Mr. Suresh Prabhakar Prabhu had announced in his speech that from the month of September 2016, railways will provide an optional travel insurance of Rs.10 Lakh to the passengers while booking tickets from its website, which can be opted by paying an extra 92 paisa.

UPDATE: Now while booking for train ticket you will see the prize “Rs.0 per person” in the option of insurance. So there is a possibility that the insurance amount have been added with the ticket fare.

insurance cover for train accident in India by IRCTC

Travel insurance policy by IRCTC is now mandatory

Earlier this accidental insurance policy was optional but now IRCTC i.e. Indian Railway and Catering Tourism Corporation Ltd. has decided to make it mandatory for the safety purpose of the passengers. Now if you book your tickets, you will not get an option to choose if you want the insurance or not. It has recently become mandatory as it was hinted some time back as per this article.

You can see the snapshot below

Choosing the insurance policy while booking IRCTC ticket

This policy is just like a travel insurance policy where a train traveler or passenger who books a train ticket from IRCTC’s website will get the insurance up to Rs.10 Lakh by paying an amount of less than Rs.1 extra while confirming the ticket. This amount will be provided to the family/nominee/heir of the person if he/she gets injured or dies in train accident.

3 companies which provide IRCTC policy

IRCTC has a tie up with 3 insurance companies which are providing this policy. These insurers are Shriram General, Royal Sundaram and ICICI Lombard. We recently tested it to see which company is providing the insurance and we got a message with Royal Sundaram. It might be different in your case.

3 companies which issue irctc travel insurance

Initially this scheme was introduced on a trial basis, but now it’s compulsory. The passengers having confirmed tickets, RAC (Reserved Against Cancellation) or are on waiting list can have benefit if this insurance.

This facility is not available for the sub-urban trains. Only Indians can get this policy. Children and Foreigners are not eligible for this policy. The insurance will be valid in cases like train accident, riots, terrorist attacks, shoot-out or arson in train, on platform or on the route to its destination.

What is covered under IRCTC Travel Insurance policy

Unlike common belief, the travel insurance with IRCTC goes beyond cover on death and provides various other benefits like disability insurance in various conditions.

Below are the details

  • 10 lacs for death
  • 10 lacs for permanent disability
  • 7.5 lacs for partial disability
  • Upto 2 lacs for hospital expenses
  • Upto 1 lacs for transportation of mortal events

Who can claim compensation of accidental insurance policy by IRCTC?

If the deceased is married then his wife, son or daughter can claim for the compensation. The daughter or son should not be minor if they are claiming. If the deceased is not married then his or her parents can apply for compensation. In other case, if the deceased has nominated someone else like other relative or any friend then he/she can also claim for the compensation.

In short we can say that the person whose name and details have been filled in the application by the deceased while booking the ticket can claim the compensation. The only thing is that he/she should have ID proof.

As per rules, within 4 months the insurance claim has to be filed from the date of insured event. All the terms & conditions, benefits and exceptions of this policy are mentioned in this pdf, download it and read it in detail.

Please watch the video below to learn about this topic ..

How to apply for the compensation of IRCTC accident insurance policy?

The nominee or the claimant can apply for the compensation to the nearby office of the insurer company which the deceased had selected at the time of booking ticket. You has to visit the insurance office and fill the compensation form and attach all the documents essential for the claim.

Why this Policy is Important?

In last 6 years around 800 train accident cases were registered in India in which near about 600-620 people died and 1850 were injured. More than 15000 people are killed in railway accidents per year as per some reports

Just imagine, you could have been one of those. What financial impact it can have on your family?

But many people just ignore the travel insurance thinking that it can never happen to them, as if they are GOD. Anyways the irctc insurance charge is just Rs. 92 paisa, which is nothing compared to the benefits it provides.

train accident insurance policy by IRCTC in India

Disability in case of train accidents

For an ordinary person, if such accidental case happens then it will be too much difficult to arrange money for hospitalization. And the cost of this policy i.e. 92 paisa is negligible as compared to the total train fair and the compensation.

The big reason to worry is many times these accidental victims die just because they couldn’t get proper medical treatment or even immediate help also.

From 1st Oct, Insurance policies will be issued online (even renewal policies)

Starting 1st Oct 2016, all the insurance policies are going to be issued in electronic form.

Yes, you heard it right

Few years back IRDA had come up with the concept of 13 digit e-Insurance Account (EIA), where an investor had the option to convert their existing physical policies into demat form, but till now it was not mandatory. However now things have changed and starting 1st Oct,2016 it has become compulsory.

Now, every insurance company has to issue all kinds of insurance policies in an online format. So if you are buying any kind of insurance policies (life, health, motor, pension policies and all kind of general insurance policies too) you need to have an e-Insurance Account (EIA) and the policies will be issued in Demat form only in that account.

This will be true even for renewal policies. So even if you are not buying any fresh new policy, at the time of your policy renewal this will apply to you

Under which cases, is this e-insurance account mandatory?

This e-account is required only if the annual premium crosses Rs 10,000 for most of the policies like term plan and health insurance or if the sum assured is above 5-10 lacs. The exact requirement is as follows for various kind of policies (source link)


How to open E-Insurance Account?

Step 1: Choose the Insurance Repository

There are 5 registered insurance repositories in the country, licensed by IRDA, out of which you need to choose one. These are …

  • CAMS Repository Services
  • SHCIL Projects Limited
  • Central Insurance Repository
  • Karvy Insurance Repository
  • NSDL Database Management

Note that you can choose any one of them, and there won’t be any difference, other than level of service. At the backend, everything will be the same. Also if you are not satisfied with your insurance repository provider service, you can switch to another one later.

Step 2: Fill up the form and submit the documents

The process now is very simple, once you have decided the repository company, all you need to do is fill-up the form and attach your KYC documents and submit it to their office in your city.

CAMSrepository also has an option where you can first fill-up the form online and then download the filled form. I think it will work for most people and save time. If you want to fill the form offline, you can download e-insurance account opening form here

Following are the documents you need to submit

  1. e-Insurance Account form (fill by hand OR filled online one)
  2. Date of Birth Proof (PAN , Passport, Voter Id etc)
  3. Photocopy of ID proof (PAN or Aadhaar Card)
  4. Photocopy of Address proof (Aadhaar, Passport, Electricity or Telephone Bill etc)
  5. Canceled cheque
  6. Passport size photograph

Note that the canceled cheque is required so that the information of the bank account is captured beforehand, Any maturity proceeds or claim amount will be paid in this same account. Ideally, this should be the same one from where the insurance premium is paid, but not mandatory.

All the major insurance companies like LIC, ICICI, HDFC, and others have already joined hands with this facility.

Check out this short video created by CAMS team

Once you submit the documents, it will just take a few days to open the account.

If you need the detailed list of the documents required, you can view this PDF document (2nd page)

The concept of Authorized Representative

A special feature called “Authorized Representative” is introduced in this e-insurance account where an investor can assign someone trustworthy or close to being AI (authorized representative) who will be able to access the details of the account in case of death of the policyholder. This is different than the nominee.

For example, I can give my close friend name and details in the AI section ask him to have a look at all my details in case I am dead and ask him to communicate things to my family as per my plan.


Features and Benefits of e-Insurance Account (EIA)

Let me know to share some benefits and key points of this e-insurance account and how it will benefit the overall insurance industry as well as the investor, even though it may look like another hassle to you right now

  • FREE account – This account will be 100% FREE account for investors, there are no charges or maintenance fees to be paid by anyone. One person will have only a single account (like PAN)
  • All policies at one place – This will be the single point of contact for investors to view, download and manage their insurance policies, be it life, health, motor or any travel insurance policy.
  • No KYC repetition while buying new policies – After doing the KYC first time, you won’t have to do it again and again when you buy new policies. All you would need to do is mention your EIA number and buy the policy.
  • Get reminders – You will get reminders for your policy maturity, payment reminders and any other important updates.
  • Single place to update your KYC – IF you want to update your mobile, address or other details, you will just have to update it in e-insurance account and not in each policy individually.

Understand that with this initiative, the insurance companies will simplify their process and a good amount will be saved as there won’t be a lot of paperwork involved (printing of documents, courier etc) and that’s why insurance companies will fund this initiative and will keep it FREE for investors.

Converting your existing physical Policy in Electronic form

I know you must be thinking about what will happen to my existing policies which I have bought till date? So, there is a simple process to convert them online.

Once you open the e-insurance account, you can apply for conversion of your existing policies into the online form (its good that you do it beforehand, because at the time of renewal it’s going to happen anyways going forward)

As per Cam’s repository FAQ point 18, you can just mention your policy number and it will be converted into an online format

18. How do I convert my existing paper policy into electronic form?

If you already have eInsurance account, log in to your eInsurance account, click on “ePolicy conversion” and enter your policy number, name of Insurance company that needs to be converted into ePolicy. In the next few days, your policy will be converted into ePolicy.

You can also download the policy conversion form and submit it for offline -> online conversion of policies

Please share what do you think about this new rule? Do you think it will help investors and the insurance industry?

Want to buy health insurance with small premium? – Use super topup policies?

Do you want to know how you can take a high health insurance coverage at a cheaper premium, without compromising on the benefits and features? Today I am going to share how you can do that using top-up health insurance policies.

Gone are the day’s when Rs 2-3 lacs of health cover was considered a good cover, its not even average cover these days. With rising health care cost, a health cover below 5 lacs is just not sufficient for most of the people. I am confident on that, because in last 6 months, we have helped more than 1000+ people to take their health insurance and majority of them ended up with a coverage in range of 5-20 lacs.

I know, a lot of investors understand the importance of high health insurance cover, but they are unable to afford a high premium. So what is the alternative?

Use Super Topup Policies to increase your health cover at lower premiums

The solution is Super topup policies.

You can use Super Top-up health insurance policies to upgrade your health cover by paying a lower premium. Super Topup plans are the health insurance plans which pays only when a certain threshold is crossed.

For example, consider a super top-up plan for Rs 20 lacs with deductible of Rs 5 lacs.

In this case, the policy will pay only when the initial Rs 5 lacs is paid off and they will pay the additional amount above Rs 5 lacs. So if the claim amount is Rs 12 lacs. The policy will only pay Rs 7 lacs (over and above 5 lacs deductible. If you are new to this concept, we have already explained the topic of super top up in detail here, please read it first.

So how can you use super top up to take a higher cover?

Instead of taking a full cover of X+Y amount, you can take a base cover for Rs X and take a Super topup plan for Y amount with X as deductible. This way you will be covered upto X amount by the base policy and for any claim above Rs X, the super top-up policy will get triggered and come to your rescue.

The main benefit here is that the Super Top-up policies come very cheap and overall your premium will be small.

Example of 3 member family (2 adults below 35 yrs + 1 kid)

Suppose you want to take a high cover like 20 lacs for your family (3 member family). Here you have two choices

Choice 1 : You can take a stand-alone policy of Rs 20 lacs here. If we take an example of Optima Restore Family Floater, the yearly premium would be Rs 23,527.

Choice 2 : As 2nd choice, suppose you the same take the same Optima Restore Family Floater for Rs 5 lacs, which will cost you Rs 12,513 and on top of it, you take a 20 lacs super topup from L&T Medisure Super Top Up with 5 lacs deductible, for which the premium would be Rs 4,389. So the total premium in this choice will be 16,902.

That’s a saving of 28% in premium.

However, note that both the choices will differ with each other, because from features point of view there are a lot of differences in both the choices.

So for those who already have a 5 lacs cover already and wanting to increase their cover to 15 lacs total, below I have listed down some companies top up cover plans and the extra premiums they will have to pay.

Below is an example of how you can increase your health cover from 5 lacs to 15 lacs (or take 15 lacs cover).

super topup plan example

Do you have a small health cover right now?

So, ask this question to yourself? Do you have a small health cover of 2 lacs, 3 lacs or max 5 lacs and you want to upgrade it to a big number like 15 lacs or 20 lacs?

For the sake of explanation, let me take an example of 5 lacs existing cover and lets see how you can increase it to 15 lacs for a small premium increase. So all you need to do is take a super top-up cover of 15 lacs with 5 lacs deductible. Below are some plans with the premium amount for a single individual of age 35 yrs.

Premium for different Super top up plans in market

Comparison of Super Top-up Plans in Market?

Below I am sharing the comparison of various super top up plans in the market and how they differ from each other on various parameters.

Top up policies comparision

Why Super top up premium is less?

I am sure many investors will have this question in mind that “Why is the premium for a super top up plan so less?“. The answer is that the probability of a super top up getting triggerred is statistically very less and hence the risk for the insurer is not that high.

Think about it this way. If you have a large cover of 15 lacs right now, what  would be the hospital bill on an average? Most of the times, it would be in range of 50,000 to 1 lacs if you get hospitalized for a minor case and few lacs if there is some accident or some major issue.

Only in a very very fatal case or if you are highly unlucky, your bills will run over in the range of 10-15 lacs and thats going to happen once or twice in your lifetime. So the chances for a company paying for a claim above a certain threshold is very less. That’s the reason the premium for a top up plan is less. Higher the deductible, lower the premium.

Is it advisable to buy the base plan and super top-up from the same company ?

The answer is YES. If your base plan and the super top up plans are from the same company, it would surely help because you have to deal with the same company for both the claims. The documentation process is more simple and the communication is smooth. The company will not find any issues because it has all the records with them.

However note that even if you have it from different companies, it’s ok. You ultimately have to look at the features and what combination works best for you and if the total premium is affordable to you or not.

What are Convertible Top-up plans ?

Lately, a new kind of top up called as convertible topup plans are coming up in market.

“Some companies offer Super Topup plans with an additional feature that allows the plan to be converted into a base plan. This is done by buying out the Deductible in the plan.

For instance, if you have your company health insurance for Rs. 3 Lakhs you could buy a Topup of Rs. 15 Lakhs with a deductible of Rs. 3 Lakhs. In case you leave this employer, and/or are without cover, you can apply for buying out the deductible at the time of renewal by paying additional premium. There are certain conditions/triggers based on which this feature gets activated into the plan.

This is an excellent feature for people who feel that they would be working with employers who will provide health insurance cover all their working life, without any break.

For instance,

In case of Religare Enhance – The convertible feature gets activated after 4 continuous renewals. The plan has a waiting period of 1 year for Pre-existing diseases

In case of Apollo Optima Super – The option is available for customers who have bought the policy before crossing the age of 50 years. The option can be opted between the age of 55 and 60 years at the time of renewal by paying additional premium, if the policy has been renewed continuously without break. “

Who all should buy a super top up plan ?

  • Those who are having a small cover by themselves or a group cover through their employer and want to increase their cover (ideally you should have a base policy for a minimum amount)
  • Those who are right now having a small cover and want to upgrade it
  • Those who can take care of small medical bills themselves (like up to 2-3 lacs) and only want help in case of bills beyond that number by paying a small premium

Other Important Points related to Super top-up plan

  1. A super top up policy can be taken stand alone – A super top up policy can be taken without a base policy. There is no compulsion that you should hold a base policy.
  2. Premiums will rise as per age slab – You should be aware that just like a normal health insurance plan, a super top up plan premium will also rise as per age slab in coming years, so even if the premiums look very small right now, it’s bound to increase later
  3. No Claim Benefit not present – Generally super top up plans do not offer No Claim Bonus (NCB) . This is the primary difference between taking a base cover of a high amount and combining a small cover with top up cover, because then you loose on the benefits of a No Claim Bonus over the years.
  4. Not always a great option – Just because the premium is less, it does not mean that combining a small base cover with a super top up is always the best plan. Depending on situation, you need to find out if its a good option in your case or not. It might happen that you might loose out on some benefit and feature on the top up plans

I hope this article helped you to understand how you can increase your health cover at a small premium. Please ask your questions if any below in comments section

Which is the best critical illness policy in India?

Do you know that, as per Indian health statistics, every year 3 % of the population go below the poverty line due to the heavy spending on illnesses?

It means, because of large financial outgo for treatments, every year 3% of the population, drop down to one level below their present class i.e. high-class people become middle and middle transforms to lower class. So, Imagine how badly our financial life may get affected if we do not have a proper source of funding at the time of facing non-curable diseases.

The probability of getting affected by life-threatening diseases are getting higher day by day.

As per the growing modern trend in our society, our lifestyle has changed in a bit good way but a lot in a bad way (eating junk/overeating & drinking). There is a rapid rise in obesity in India, which leads to diabetes, stroke and many heart diseases.

As per the statistics on Indian health –

    • Diabetes currently affects more than 62 million Indians, and India is projected to be home to 109 million individuals with diabetes by 2035.
    • About 1.7 million Indian’s deaths caused by heart diseases every year, according to WHO.
    • The incidence of cancer in India was 70-90 per 100000 population in the year 2014 which increased to 106.6 new cancer cases in 2016 per 100,000 people.

Along with bad lifestyle, pollution is also affecting our health. 7% of death in India is due to respiratory diseases. Before any of this life-threatening disease happens to us. We should be prepared financially so that we can utilize our energy fully on the treatment and not on the financial burden of that time. So, to meet those uncertain financial needs, having a critical illness policy cover will be the best resort.

If you are in a hurry so just watch the video below to get a brief idea.


What is critical illness cover?

Critical Illness insurance is an insurance product in which the insurer (insurance company) is promising to make a lump sum cash payment if the policyholder is diagnosed with one of the specific life-threatening illnesses on a predetermined list as part of an insurance policy. The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation, etc.

Every critical illness policy specifies the illnesses covered and not covered. The major illnesses like heart attack, cancer, stroke, and coma are commonly covered by all the critical illness policies. As the probability of occurring these is high and the payment on these illnesses (cancer or coma) are not one time task, it might be the life time operational costs. And the cover for other critical illnesses varies from company to company.

Below given table highlights the commonly covered illnesses with varying and uncovered illnesses.

list of illnesses covered/not covered under critical illness policy

There are some illnesses that are not covered by any critical illness policy, so make sure that you are not buying a critical illness specifically for getting covered from the following illnesses, as these are not going to be covered by any critical illness policy. Before buying any critical illness cover from any insurance company one should carefully read the policy terms and conditions to see which all illnesses are covered under a particular policy.

here are the benefits of critical illness cover

Benefits of Critical Illness Cover –

  1. Financial security for your loved ones– Critical Illness cover not only pays for protecting your life but makes your family feel secure financially.
  2. More than 30 Illnesses are covered -Not all but some companies cover more than 30 illnesses. Before
  3. A second opinion of the doctor – Almost all the companies provide second opinion. Second opinion gives us the chance to get a better review on diagnosed illness from a specialized doctor.
  4. 100% payout -If diagnosed with a critical illness then the company pays the entire sum assured of the policy.
  5. Tax benefit – All the policies of critical illness comes with a tax benefit u/s 80D of Income Tax Act,1961.
  6. Peace of mind – Once you have taken the critical illness policy you can be relieved because your financial state is now taken care off. If you encounter any critical illness disease then you can now focus more on the treatment rather than managing funds from here and there.


For your reference, I have done an analysis of finding the top 5 critical illness cover policies in India. Below given is the list of top 5 critical illness cover policies.

****** The premium details are for a 1-year policy including GST.

comparison table of top critical illness policies in India

6 points to get the best critical illness policy?

As now you know the top 5 critical illness policies, still it is not easy to select the best policy out of many. So, here are some of the points to evaluate the best critical illness policy.

#1 – The Premium amount

Comparing premium amount is as simple as, selecting a critical illness policy of that company which gives the best value for money at the same sum assured and illnesses cover you are looking for.

#2 – Sum Assured

Getting the highest sum assured should not be a criterion for policy buying. The standard cover suggested is of 10 lacs to 20 lacs, so that your financial life should not get affected due to any uncertain illness.

#3 – Waiting Period

A waiting period is a period up til which any of the illnesses specified under the policy are not covered.  For example, if it’s 2 months, then if any of the critical illness happens to you before 2 months, your claim will not be taken. The insurance companies will consider your claim for paying the sum assured only after the period of waiting has ceased after buying a critical illness policy. So, before buying policy make sure that policy is having lesser waiting period. Almost all the companies have a waiting period of 90 days (not including existing illnesses).

***For existing illnesses waiting period is 48 months.

#4 – Survival Period

The survival period is the length of time, for which the insured must survive after being diagnosed with the illness,  in order to get a claim. The insurance cover will be paid only after the survival period has passed. So, if a person’s death happens immediately after a heart attack, even if he has critical illness insurance, his or her family may not receive any payout from the insurer.

The length of survival period varies among different insurers, it can be 14 days or 30 days, etc. So,  for buying a critical illness policy make sure that the policy has the least survival period.

The logic behind the survival period clause is that, critical illness insurance benefits are meant to be used by the insured as a living benefit to recover from illness, not a Death benefit. So, from this it is very clear that you should have a term insurance(life insurance) to provide the cover to your family, even if already having a critical illness cover.

#5 – Diseases covered

On selecting the best critical illness policy do not look for the maximum number of illnesses, it will be very illogical and will also lead you to pay a higher premium. Instead, go for a standard set of illnesses ( i.e. 28-32 illnesses covering major 4 critical illnesses) that might happen due to your life style habits and hereditary.

#6 – Entry Age 

Check the entry age of policy before buying. Mostly the entry age for critical illness policy is of 18-64 years

Why have a Critical Illness Cover if I already have Health Insurance?

One last thing to keep in mind is that health insurance and critical illness are two different products. Critical illness typically covers you from specified illnesses and not regular health-related issues.

Health Insurance provides exhaustive scope of coverage. Such as in-patient hospitalization, pre & post hospitalization, day care treatments, ambulance costs, organ donor expenses, etc. Where as Critical Illness plans provide coverage for a specified list of illnesses mentioned in the policy contract.

Below given table briefly represents the difference between health insurance and critical illness plans,

table showing comparison between health insurance and critical illness insurance plan

So, as you now know why and how to select the best critical illness policy, if you think any critical illness cover is best suitable for you, then go for it. Having one critical illness insurance policy is must in today’s era.

Let us know your views and queries about this article in the comment section.


How to Create your own Child Policy with this Calculator

Everyone is so desperate to buy a child plan (example). The features of so-called children plan are bundled in a way that it looks magical, as if there can’t be any other product like a child plan and hence, we pay much more than the price it really deserves most of the times. So today we will see how we can create your own child policy by combining term plan and other investments like PPF, FD or a Mutual Fund.

When you hear “Child Policy”, It looks extremely attractive. It gives you money on your death, It gives yearly income and it also gives you money on the maturity of the plan (generally when you child is ready for higher education) . So the point is that a child policy is so much in demand and attracts investors because of its features. However there are some issues with child plans in market. They come with high costs, rigid structure and very less control over it. Traditional Children plans (which are endowment or money back type) mainly do not deliver of returns front and ULIP children plans come with high cost .

So what can you do now ? Can we create a child policy on your own by combining Term Plan and Investments in some separate instrument, in a way that the Term Plan will take care in case of your death and investments will take care of higher education cost in case you survive.

So just like you pay a yearly premium for a Child policy, even in this case you will pay a fixed amount every year. A part of it will go as Term Insurance Premium and rest will go into investments. But in this case the term plan will also open ways for yearly income, as well as future big time expenses for child higher education as well.

When you are not there, the amount received by family from term insurance can be invested in such a manner, that it can provide a yearly income + lumpsum money NOW  + Lumpsum money in FUTURE. Lets us take an example and see how it will look like. Suppose you have a 1 yr old daughter for whom you want to create a Child Policy like structure, and you want to achieve these 3 things.


1. Lumpsum Money If you are no more , family gets 50 lacs upfront as lumpsum.
2. Regular Income  After your death, your family should get Rs 50,000 per year separately for your daughter education for next 20 yrs and this Rs 50,000 should increase every year by 9% (so that inflation is taken care of) and assuming this money will grow at 8% return (FD)
3. Money for Higher Education When your daughter turns 21 yrs old and is ready for her higher eduction, she should get another 25 lacs at that time.


In order to achieve the 3 things mentioned above , you need to buy a term plan for Rs 65 lacs (Sum assured) and start investing Rs 50,000 per year in something which gives 8% return on annual basis. Apart from this, you will need to clearly define to your family what actions they need to do once you are no more (these are simple tasks like opening a FD or investing money in PPF or balanced funds). The yearly premium for this structure would be around Rs 60,000 (50,000 investment + 10,000 premium for term plan) . Lets us see how this structure will be helpful .

If case of death (Your family gets 65 lacs)

  • 50 lacs can be taken out as lumpsum
  • 5 lacs can be invested one time to get 25 lacs at the end of 20 yrs
  • 10 lacs can be invested one time to get a yearly income of 50,000 increasing by inflation figures!

Incase you survive

  • Your investments of 50,000 annually will create a corpus of 25 lacs at the end of 20 yrs anyways

Lets us see this same example through a picture, which will clearly illustrate how this 60,000 premium payment will create a Child policy kind of structure and how it will help you in case of death and survival.

Children Policy Example

So using this structure you can achieve what a child policy provides. However this whole method has its own pros and cons. There is a lot of flexibility in this structure which a child policy does not have. However this kind of structure would need some level of trust and you will need to instruct your family about it and what they need to do incase you are not around. I think if you are preparing a will, you can clearly mention what needs to be done with the term plan money, so that family members can take those actions.

Download the Calculator and Start Planning your child Policy

Below is a calculator which you can download and punch in your numbers, the calculator will tell you how much term plan you need to take and how much investment has to be done per year. The expected return and inflation is decided by you. So if you want your family to put the money in FD or PPF after you are there around, then put the return expected as 8%, if you want it to be in Balanced Funds put 10-11% and incase of Equity Mutual Funds, put 12-15%. Also note that the premium for term plan will depend on the company you choose for taking a term plan (LIC is coming up with its term plan in few weeks as declared by them recently).

Download Child Policy Calculator Here

Comparison with Child Plans in Market

It’s important to see what is the difference between the child plans in market and this custom-made child policy by combining term plan and investments

Child Plan Comparision

Comparing it with LIC Jeevan Ankur

Lets compare this with LIC Jeevan Ankur Policy. If a 30 yr old male has to take a 25 lacs policy for a tenure of 20 yrs, He will have to pay premium of Rs 1,00,000 per year (approx) . In case of death, his family will get 25 lacs + 2.5 lacs income per year till maturity + 30 lacs of maturity (assuming 20% loyalty addition) , incase the person survives, he will get 30 lacs anyways on maturity.

This same thing can be achieved if a person does a 60,000 per year investment in PPF or FD (assuming 8% yearly return) and taking a term plan for Rs 55-60 lacs for a premium of say Rs 10,000 per year (for most company, the premium is 5,000 but lets assume LIC online term plan is taken which will come in few weeks now). So he has to pay total 60k + 10k = 70k per year to achieve the same results, with a lot of flexibility.

Do you think this whole strategy of creating your own child policy is of any use? Do you think it’s too complex? Share your views.

LIC Jeevan Ankur Review

LIC Jeevan Ankur (Plan 807) is the new traditional Children Plan from LIC. It has come at the right time when most of the people look for investing their money for tax savings and given the right time (markets doing bad), it is expected to get a lot of interest from parents looking for parking their money in something safe.

LIC Jeevan Ankur Policy

Jeevan Ankur is a traditional endowment plan where you pay regular premiums and at the end of the policy term the sum assured is paid along with loyalty additions declared at maturity. The nominee in this plan has to be your child (which makes sense), assuming that the plan is bought purely from the point of securing child’s future. (Learn how LIC Policies work)

If policyholder dies before Maturity

In case the policy holder dies before the maturity of the policy, the basic sum assured is payable immediately and a 10% of sum assured is payable each year till the end of the policy term as the income. This is a good option which makes sure some payment is made each year without fail. The premiums are not to be paid after policyholder’s death. Though there is no specific wording about this waiver of premium, it is very obvious.

If the nominee (child) dies before maturity

In this case, the policy holder can nominate another child and other benefits continue as it is. If there is no other child then, the benefits will continue and the maturity proceeds will go to legal heirs.

Optional Riders like Critical Illness and Accidental death benefit.

Apart from base plan in LIC Jeevan Ankur, you can also add two riders in this plan at extra cost. These riders are Critical Illness rider and Accidental Death rider.

Critical Illness rider: One can add critical illness rider for an amount in range of 50,000 to 5,00,000 and in case of diagnosis of some defined illness, an amount equal so critical illness sum assured will be paid. However this is available only if the policy holder age at maturity is below 60.

Accidental Death Rider: One can also get a rider called Accidental Death rider, which will pay additional sum assured in event of death . The maximum sum assured for accidental rider can be upto 50 lacs and the condition is that the maximum age at the time of maturity has to be 70 yrs.

Other Features of LIC Jeevan Ankur

  • There is option of regular premium payment and Single Premium (one time)
  • Minimum and Maximum age of the policy holder at the time of taking the policy has to be between 18-50 yrs and minimum and maximum age of child has to be 0-17 yrs
  • The maximum age of policy holder at maturity has to be 75 yrs.
  • The maximum policy term is 25 minus age of the child.
  • No loan facility will be available under this plan.

Surrender value and Paid up of Jeevan Ankur Policy

To surrender this policy or making it a paid up is very similar to other endowment policies, where it attains the surrender value only after the premium payment for minimum 3 yrs and the surrender value will start from 30% of the premium paid (excluding the first year premium). In case of paid up policy, you will get your premiums at the end of the maturity period.

Returns from LIC Jeevan Ankur Policy

Just like other endowment policies even LIC Jeevan Ankur seems to provide lot of features and bundles things in such a way that it’s too tempting, but from investment point of view, its returns are not something to cheer about. Consider this example- If 30 yr old male wants to take a 10 lacs sum assured policy for a 20 yr tenure , the premium would be Rs 41,350 per year (as per the chart on LIC website). Assuming that the payment is done on yearly basis and the sum assured is above 5 lacs, the rebate’s would be 5% (2% + 3%) so the final premium would be around Rs 40,000 per year. So if a guy pays 40,000 per year for next 20 yrs he would then get 10 lacs as sum assured and loyalty additions extra. Loyalty additions generally range from 10%-20% of Sum assured, assuming its 20%, the final maturity proceeds would be Rs 12,00,000 .

So if you pay Rs 40,000 per year for next 20 yrs and get back only Rs 12,00,000 , the final return (IRR) turns out to be only 3.7% CAGR return over long-term. Note that the actual IRR would depend on the tenure , if you take the case of 10 yr tenure , then the IRR would be different , but overall the returns from this policy is extremelly low.

Best returns only if death is premature

The policy return would really work out well if the policy holder death is premature, the early, the better. Assume that in the same example as above, if the policy holder dies after paying 2 premiums in that case, the total outgo would be Just Rs 80,000, but his family would get Rs 10 lacs and Rs 1 lac per year as income. This looks very attractive but note that this is the situation whose chances are very less and just because of this point, you can’t buy the policy.

Look at Liquidity also

The only thing which most of the people concentrate is returns from the policy, but one of the parameters to look at is liquidity of the policy too. The biggest nightmare can happen if you need your money from the policy after 2 yr or 5 yrs or 10 yrs. In that case the money you get back is horribly low and that’s where most of the people feel the pinch.

Should you buy Jeevan Ankur?

I am really trying now a days to let you decide on such questions. As I have done this short review its enough for you to decide if you want this policy or not. The returns over long-term are guaranteed only to certain level and a lot depends on loyalty additions. If it’s not good every year, then returns can be extremely bad, else it might be okay. I personally don’t see a reason to invest in this policy. A plain term plan and SIP in balanced funds looks better option to me from returns point of view and definitely from liquidity and simplicity point of view. I hope you liked this review of LIC jeevan ankur

Register Complaints to IRDA regarding Insurance matters

Do you face issues while dealing with your Insurance Companies ? Do they dont answer you on time or dont entertain your genuine concerns on time ? Are you having a problem with Claims or other issues with an insurance company ?

Should you Complain ?

Incase you are facing issues like unsatisfactory answers , no replies on time , delay in replies, taking matters for granted and not treating you properly, any misselling in Insurance, you can complain to IRDA about all this , its just a call away, hence better use the facility and dont feel like you are not powerful enough. You can also mail Insurance companies and cc the IRDA email id for complaints for faster and better reply, but only incase you are facing issues , dont spam them 🙂 . Here is a nice Video Advertisement from IRDA called IRDA – Apki Suraksha ke Liye . I hope they do things in real life also the way they show in video 🙂

Call centre

IRDA (Insurance Regulatory and Development Authority) has started a new service where you can approach by phone or E-mail and complain against your Insurer. There is a call centre started by IRDA for registering grievances on policy-related matters. The call centre will provide an easy and convenient way to bring complaints to the notice of the IRDA. the Toll Free Number is 155255 and Email for complaints is [email protected] . Before the complain, you can approach the Insurance Ombudsman where the dispute involves amount lower than Rs 20 lakh. You can find the contact mail address of the Insurance Ombudsman of your region from IRDA’s Web site.

Do you think its a good resource and would be of help to consumers or will fail just like other projects ? Comments ?sha