I am 37 years, married and residing in Bengaluru. I had availed an endowment life insurance plan with a sum assured of INR 10 Lakhs for a term period of 20 years. I pay an annual premium of INR 50,000. Recently, I fell in bad times and I want to surrender this plan as I can no longer afford the premiums. I have been paying premiums for the last 5 years. Should I surrender the endowment plan? What will I get if I surrender it?
If you have paid the premium for at least 3 years or more, you can surrender the endowment plan if the premium paying term is 10 years or more. The premium paying term of your plan is more than 10 years and you get a guaranteed surrender value as you have paid premiums for at least 3 years. The guaranteed surrender value of the endowment plan would be 50% of the total premiums paid, if surrendered between the 4th and 7th year of the plan. When you surrender the endowment plan, you lose out on all benefits associated with it; i.e. death benefits and maturity benefits. Surrender the plan if: The plan is not efficiently managed in terms of bonuses, returns or claims settled. There are better and cheaper options available. If your financial condition is bad and you cannot afford the premium. If you surrender the endowment plan, make sure to avail a term life insurance plan ( a pure risk plan) with a sum assured at least 10 times your annual income.This plan will help your loved ones live a quality life and settle home loan EMI's if you are not around.