Is it better to make a (bad) policy paid up rather than surrender it?

Suppose I realize I have a life insurance which is useless (bought under wrong understanding). Normally, in India one can surrender endowment policy after three years but surrender value is too small because accrued bonus may not be paid fully and other rules. Is it better to make it paid up? Some people say that in this case some bonus will get added and will be handed over at the end of policy term. is this true?

Is it better to make a (bad) policy paid up rather than surrender it?
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3 Replies to “Is it better to make a (bad) policy paid up rather than surrender it?”

  1. It is better to cancel the policy than to keep wasting money on this type of life insurance. You want to spend as little as possible on life insurance and get the most coverage out of it. You can only do that with term.

    There’s no such thing as bonus in endowment policy. The money goes to the insurance company. You don’t get anything out of it.

  2. Well yes its a better idea, to remain insured, than being uninsured. Making it paid-up makes you eligible to be insured, so in between something happens then atleast your heirs will get the insurance amount, also if you are not in need of the money. Its sensible (as you have become one now, rather lately) to stay put to get the insurance advantage atleast out of the foolishness.Because to be insured for the same amount now your more mortality charges will be deducted at this todays age. Effectively u will get lesser returns on todays policy.

  3. why do you think the policy is bad?

    bcoz you will be beneficial if you continue the policy rather than surrender or do paid up. in neither cases you will get too much so both options are not great.

    best would be continue

    however if you still feel that it doesnt make sense to continue this plan, then you can do paid up so that you would get the bonus but only if it is a participating policy. bcoz non-participating policies do not have bonus

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