Q1. should i surrender Jeevan Mitra – triple cover with DAB policy. i started from 2006 and it matures on 2031. with maturity amt = 1080000. I pay yearly premium of 17409. Should I surrender and reinvest or keep it as it is?
Company’s policy on surrenders :
In practice, the company will pay a Special Surrender Value – which is either equal to or more than the Guaranteed Surrender Value. The benefit payable on surrender reflects the discounted value of the reduced claim amount that would be payable on death or at maturity. This value will depend on the duration for which premiums have been paid and the policy duration at the date of surrender. In some circumstances, in case of early termination of the policy, the surrender value payable may be less than the total premiums paid.
Q2. Is there any tax on LIC maturity amount. If yes how to calculate it?
Surrender Value :
Buying a life insurance contract is a long-term commitment. However, surrender value will be available under the plan on earlier termination of the contract.
Guaranteed Surrender Value :
The policy may be surrendered after it has been in force for 3 years or more. The guaranteed surrender value is 30% of the basic premiums paid excluding the first year’s premium.
In my view if the tenure is so long, then surrender it. Buy a term insurance immediately. Regarding taxation of LIC products, go through my earlier post
Ya but surrendring gives only 30pc -1st emi. This amt where can i put this to get good return recovering what i have lost surrendring?