Surrendering LIC Jeevan Saral Policy after 10 Years: Decisions and Considerations
Surrendering a LIC Jeevan Saral policy after paying premiums for 10 years involves a complex decision-making process. This article explores the benefits and drawbacks of surrendering, important factors to consider, and the importance of understanding the nature of life insurance policies.
Benefits of Surrendering
Liquidity: The primary benefit of surrendering is liquidity. You gain immediate access to the surrender value, which can be a valuable asset in times of financial distress or emergencies. This flexibility can provide you with much-needed funds without any delay.
Opportunity Cost: If you find better investment options with higher returns compared to the policy, surrendering might be a wise decision. This allows you to redirect your capital towards more lucrative opportunities.
Financial Needs: Urgent financial needs can arise at any time. If you are faced with unexpected expenses or obligations, the surrender value can provide a much-needed financial cushion.
Drawbacks of Surrendering
Surrender Value: The surrender value typically reflects only a portion of the total premiums paid, especially in the early years of the policy. While it increases over the first 10 years, it might still not be substantial. For example, the surrender value after 10 years may only be a fraction of the total premiums paid.
Loss of Insurance Cover: By surrendering the policy, you lose the life cover it provides. This loss can be financially and emotionally devastating for your dependents in case of any unfortunate incidents.
Long-Term Goals: If the policy was an integral part of your long-term financial plan, surrendering it can disrupt your plans. You may find it challenging to align your future goals with a policy that no longer serves its original purpose.
Factors to Consider
Surrender Value: It is crucial to check the exact surrender value. LIC provides a specific formula, and it can vary based on the sum assured and the premiums paid. Understanding these details can help you make an informed decision.
Future Premium Payments: Consider whether you can continue to pay the premiums comfortably. If not, surrendering might be a better option than allowing the policy to lapse. Nap through these options carefully to avoid unnecessary financial strain.
Alternative Investments: Evaluate the benefits of keeping the policy versus investing the surrender value elsewhere. Compare the returns and assess which option aligns better with your financial goals.
Conclusion
Ultimately, the decision to surrender a policy depends on your financial goals, current needs, and the policy's performance. It may be beneficial to consult a financial advisor to evaluate your specific situation and needs before making a decision. Remember, a life insurance policy is primarily an insurance product, not only an investment instrument.
In conclusion, if you can afford to continue paying premiums, it is advisable to do so. Surrendering the policy could lead to a loss in terms of both liquidity and insurance cover. Always treat life insurance as a safeguard for your dependents and not just an investment plan.
References:
LIC's Surrender Value Calculation Financial Advisors for Expert Opinions Average Returns of Alternative Investments