Surrender or Convert to paid-up the unwanted endowment policy
This is usually after they weigh the high premium and the promise of low returns. What options exist for an investor in such a situation? In this article, we discuss three possibilities an investor has for their unwanted endowment fund.
Mar 23, 2016 11:03 IST India Infoline News Service

Surrender Option
- After carefully weighing the period of holding and terms of policy, you can surrender if the following conditions are met:
- There is a long time to maturity for the plan.
- The premium paid is not high.
- The surrender conditions and charges payable are acceptable.
Converting to a Paid-up Plan can be achieved either by approaching the insurer’s office or an agent with such a request. Alternatively, stop paying the premiums and the plan will turn to a paid up plan when premiums are not paid for two successive years. This is an option available for investors looking to avoid the high cost of policy till maturity. By stopping the premiums, you will continue to benefit from the cover and the policy will translate to obtain a paid-up value on maturity.
Finally, if you continue to Maturity of the plan you will receive a return on maturity which will be only about 6.5%.
In the frenzy of buying with little information, insurer agents rarely inform policyholders about the products, returns and exit clauses of the policies. Be sure to interrogate the plan thoroughly before purchasing and in the event that you do, weigh your options carefully on your next course of action.