Life Insurance Q&A, Surrender of Life Insurance Endowment Plans
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In this video, we will discuss some of the most important things to know about surrender of life insurance endowment plans
Edited highlights
0:22 In this video, we will discuss some of the most important things to know about surrender of life insurance endowment plans
1:19 A lot of people end up surrendering life insurance endowment plans without being aware of the implications
1:31 One you have bought a life insurance endowment plan, you need to know when to surrender it
1:45 You can only surrender a life insurance endowment plan only when it acquires surrender value
1:56 For you to get any money back from the endowment policy after the exit, the policy needs to acquire a surrender value
2:06 Any endowment plan that has a term of 10 years or less, typically starts acquiring a surrender value from the third year onwards
2:13 For endowment plans with terms of 10 years or more, the surrender value starts acquiring after 3 years
2:44 Life insurance endowment plan combines life insurance protection with investments
3:02 Even when it is acquiring surrender value, you only get a fraction of the premiums paid
3:17 This is happening because charges such as administration charges and commissions get deducted from the premium
3:39 A major portion of the charges get deducted upfront. As a result, a smaller amount gets invested initially
4:00 So, in the fourth, fifth or sixth year, you get a miniscule fraction of the premium back
4:12 Around the eighth or ninth year, you get the premiums back. So, with an early surrender of the plan you are not even recovering your premium
4:26 If you have claimed tax deduction on the premiums paid, there are tax implications
5:02 When you consider buying an endowment plan, ensure that you know all about it's benefits and buy it for the right reasons
5:17 Examine the policy conditions during the "free look period" when you get the policy documents and return the policy if you notice something amiss
