Insurance surrender v/s paid up

POSTED BY Atin Sehgal ON December 25, 2012 1:15 pm COMMENTS (6)


Recently joined this forum and think now that I was missing lot of information which is available on this forum.

Like most people I had never thought that probably term insurance would be better for a person.

I am currently paying around 1.0 L for LIC premium for a cover of what 5.0 Lac( Policies include wealth plus – 24 K…. Two Money back policy – 12 K premium …..Mkt Plus I – 36 K …….Jeeevan Saral….. 6K…..Jeevan Varsha…..16009)


Current status is

MKt Plus I – surrendered on 24th Dec 2012

Wealth Plus – opting for surender on Feb 2013

I need advice for my other three policies:-

a) Money Back :Policies – Shoudl i surrender them or make them paid up

b) Jeevan Varsha/Jeevan Saral – Shoudl i surrender them or make them paid up


I plan now after freeing up the money to take:-


a) Term insurance around 10 k

b) Health Insurance around 12 k

c) PPF -around 28 K/year

d) Gold ETF – 2500/month

e) Mutual Fund – 2500/month

Any other suggestion for tinkering my portfolio….


Looking forward to hearing asap on this.


6 replies on this article “Insurance surrender v/s paid up”

  1. This just covers your child. You also need to think about your other goals like retirement, his education and so on. I also forgot to mention individual mediclaim cover for you and family over and above what your employer offers.

    But one step at a time. Finish up all those mentioned above and you will get a sense of control over your financial life. Once you have gained the confidence that financially you can handle pretty much everything wrt child then you can move on to other things

  2. Atin Sehgal says:

    Thanks for your suggestion…

    I will use this to create my financial plan…

    Can you suggest any other financial aspects I should look into or any other suggestion you feel I should also take into account for creating my financial plan.

  3. Dear Atin, first I am very sorry to hear about your child. As a parent myself I can only shudder at this.

    To create a corpus of 2 lakh every two years you could
    a) start a RD interest will be taxed at income slab
    b) start a SIP in a liquid fund. if redeemed after 1 year tax will lower due to indexation

    Since you may need the money at any time of the year a liquid fund maybe better for you in terms of liquidity. Returns are not important for such short terms

    To create a medical corpus first insure yourself adequately with a pure online term life insurance plan. Then create an emergency corpus which will cover up to 1 years expense. Put this in a SB account with auto-sweep option in a FD. Even a plain SB should be fine.

    Then start investing in mutual funds (I have a how to choose a MF guide in my website which you could use). You could also use a portion in PPF. But PPF has a lock-in and maybe a problem if you suddenly need to use a part of the money down the line.
    So choose a PFF only if you have enough resources to handle medical emergencies down the line.

    Limit gold to 10% or so of your portfolio. Once other things are secure and you are sure need the money for long term (more than 5 years) then invest 60-70% in mutual funds and the rest in PPF.

  4. Atin Sehgal says:

    Thanks @ Free Financial Calculators..

    I am a newbie and some of the terms are really confusing for me… Although i have gained some knowledge over a period of timee ….

    Ok I will make the policy paid up….

    My needs are simple:-

    1. My child has medical condition called Cerebral Palsy due to which he is under medical care.

    Now the thing is I need money

    a) to take care for his medical needs @ 2.0 Lac in every two years
    b) creating a corpus for him for his later life…

    Due to this personal thing I really donot know what I can plan and what i should do?

    can you suggest something now or you require any more information….which I would be pleased to provide you…

  5. If you dont need the money immediately make the policies paid up. You will get a little something when they mature.

    Regarding your portfolio unless you state why are investing and when you need the money how can anyone advice?

    You need to calculate how much term insurance you need and take a suitable policy.
    Similarly for health. Choose a sum assured you can afford right now and keep increasing it each year.

  6. Atin Sehgal says:


    Will any one answer my question please……

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