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50 Year Old Woman Confused About Policy Terms: What Does 'Tenure' Mean?

Milind

Milind Vadjikar  | Answer  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 21, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Sreekumari Question by Sreekumari on Sep 21, 2024Hindi
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I can not take the full amount? What means tenure. When I have taken the policy, the reliable source informed me that after 5 years any time I take the money fully with @ 8.5 percent. Please explain

Ans: I have informed you policy details as available on the sbi life insurance website. For exact interpretation of your policy agreement terms and conditions you may kindly approach your insurance advisor.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |10219 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

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Sir, I have purchaes LIC jeevan Saral policy in the year 2012. I am paying Rs 4083/- towards premium every month. I want to surrender this policy now, but unable to find details about bonus etc. Plz help.
Ans: Surrendering an insurance policy is a major decision. You have consistently paid Rs 4083/- per month since 2012. This dedication shows your commitment to securing your future. Now, let's delve into the specifics of surrendering your policy and its implications.

Surrender Value and Its Components
The surrender value is the amount you get when you decide to discontinue your policy before its maturity. This amount includes two main components:

Guaranteed Surrender Value: This is a percentage of the premiums you have paid, minus the first year's premium and any bonuses you might have received.

Special Surrender Value: This is usually higher than the guaranteed surrender value. It takes into account factors like the duration of the policy and the total premiums paid.

Since you have been paying premiums for over a decade, you are likely to receive a special surrender value. This value reflects the time and money invested in the policy.

Evaluating Bonuses
Insurance policies often come with bonuses, which are additional amounts added to the sum assured. These bonuses can significantly impact the surrender value. However, understanding the exact bonus details can be challenging without specific policy documentation. Generally, bonuses accumulate annually and are declared by the insurance company based on their profits.

In your case, given the policy's tenure, there should be a notable bonus component. But, for precise information, it's essential to contact the insurance company directly or refer to your policy documents.

Analyzing Financial Goals
Surrendering a policy is not just about the immediate financial gain. It's crucial to align this decision with your long-term financial goals. Reflect on the reasons for surrendering the policy:

Immediate Financial Needs: If you have urgent financial requirements, surrendering the policy might provide quick funds.

Better Investment Opportunities: You might want to explore other investment avenues that offer higher returns.

Changing Financial Priorities: Your financial goals and priorities might have evolved over time.

Exploring Alternative Investments
Upon surrendering your policy, you might consider reinvesting the proceeds. Here are some options to consider:

Mutual Funds
Mutual funds offer a diverse range of investment opportunities. They are managed by professional fund managers who make investment decisions on your behalf. Here’s why mutual funds can be a good option:

Diversification: Mutual funds invest in a variety of assets, reducing risk.

Professional Management: Experienced fund managers handle your investments.

Liquidity: You can easily buy and sell mutual fund units, providing flexibility.

Potential for Higher Returns: Historically, mutual funds have offered higher returns compared to traditional savings instruments.

Systematic Investment Plans (SIPs)
SIPs are a disciplined way to invest in mutual funds. They allow you to invest a fixed amount regularly, ensuring you benefit from market fluctuations. This method can help you build a substantial corpus over time.

Debt Instruments
If you prefer lower risk, consider debt instruments like fixed deposits or government bonds. These options provide stability and predictable returns.

Equity Investments
For those comfortable with higher risk, equity investments can offer significant growth potential. Investing in stocks directly can be rewarding but requires careful analysis and monitoring.

Assessing Risks and Benefits
Every investment comes with its own set of risks and benefits. It’s important to evaluate these before making a decision:

Risk Tolerance: Understand your ability to withstand market fluctuations.

Time Horizon: Consider the duration you can keep your money invested.

Financial Goals: Align your investments with your long-term objectives.

Tax Implications: Different investments have varied tax treatments. Understand the tax benefits and liabilities associated with each option.

Consulting a Certified Financial Planner
To make an informed decision, it’s wise to consult a Certified Financial Planner (CFP). A CFP can provide personalized advice based on your financial situation and goals. They can help you:

Analyze Your Current Financial Position: Assess your income, expenses, and savings.

Set Realistic Goals: Define achievable financial objectives.

Create a Customized Investment Plan: Develop a strategy tailored to your needs.

Monitor and Adjust: Regularly review and adjust your plan to stay on track.


Your dedication to paying premiums for over a decade is commendable. This long-term commitment reflects your focus on financial security. When considering policy surrender, it's important to maintain this long-term perspective. Think about how your decisions today will impact your financial future.


We understand that navigating financial decisions can be challenging. It’s normal to feel uncertain about the best course of action. By gathering information and seeking professional advice, you’re taking the right steps toward making an informed decision.

Final Insights
Surrendering your insurance policy is a significant decision with various implications. It's essential to consider the surrender value, bonuses, and your long-term financial goals. Exploring alternative investments can provide opportunities for better returns and financial growth. Consulting a Certified Financial Planner can offer valuable guidance tailored to your needs. Remember to maintain a long-term perspective and make decisions that align with your financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |10219 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 30, 2025

Money
Hello Sir, Thank you very much for taking some time to give your insights. I inquired about surrender value and maturity amount. If i decide to Surrender the policy now, I would get between 2 Lakhs to 2.25 Lakhs. On maturity, I would get around 21 Lakhs. This includes bonuses and other extra. I even checked in LIC online tool. Request you to please advise on this. Thank you so much.
Ans: Thank you for sharing the updated surrender value and maturity amount details.

You will get Rs. 2 to 2.25 lakhs if you surrender now.

On maturity, you may get Rs. 21 lakhs after 15 more years.

Now, let’s assess both options from practical, financial, and emotional angle.

Comparing Current Value vs Future Value

If you hold, you will pay Rs. 5.4 lakhs more over 15 years.

The return will be Rs. 21 lakhs. That includes your Rs. 3.6 lakhs already paid and Rs. 5.4 lakhs more.

Net gain is around Rs. 12 lakhs over 15 years.

This gives you less than 5% annual return.

Also, this money is locked for 15 years. No liquidity.

If You Surrender Today

You get Rs. 2 to 2.25 lakhs in hand now.

No more premium to be paid. Rs. 36,000 saved annually.

That frees up cash every month. Rs. 3,000 monthly is useful for other priorities.

If you invest through SIP in mutual funds, you get better returns.

Debt pressure also reduces faster with this Rs. 2 lakh.

Emotion vs Logic

Rs. 21 lakhs after 15 years may sound attractive.

But this is slow growth. And not flexible.

You must not make decisions from emotional attachment.

LIC policies sound secure, but are poor wealth creators.

You can get better cover with term plan and better returns with mutual funds.

Decision Summary

Surrender now gives flexibility, cash flow, and debt support.

Continuing gives low return, poor liquidity, and future burden.

From Certified Financial Planner’s view, surrendering is the right choice now.

Once your debt is under control, start SIPs in regular mutual funds through MFD with CFP support.

You will grow faster and stay more financially stable.

You have taken right steps by evaluating surrender now.

Make the change and move to better financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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Sir, my son had got provisional admission in RAIT Ramrao Adik Institute of Technology ( DY Patil Deemed to be University Navi Mumbai) for B.Tech in Computer Science and Business systems. Through MHT- CET, he also got alloted Electronics and Computer Science Engineering at Pillai College of Engineering,New Panvel Navi Mumbai. He is interested in Computer Science and Software. But the fees of Pillai's college is lesser than RAIT. He also plans to foray into Entrepreneurship in future if possible. We are not able to understand what to do. Can you please guide?
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