Financial experts recommend treating each endowment policy as a separate investment rather than opting for blanket surrender when managing multiple policies. According to SahajMoney founder Abhishek Kumar, a SEBI-registered investment adviser, the right approach involves analyzing each policy individually based on specific factors including remaining tenure, premium amounts, and current surrender value. This systematic approach helps policyholders make informed decisions about their insurance portfolio management.
Kumar advises policyholders to create a detailed assessment of each endowment plan by listing all policies with their start date, remaining tenure, premium amounts, sum assured (SA), current surrender value or paid-up value, and whether tax conditions such as Section 80C lock-in period or Section 10(10D) limits on premium to SA are applicable. This systematic approach helps identify policies where the internal rate of return (IRR) from continuing the policy is clearly lower than conservative alternatives, making surrender a viable option subject to tax implications and surrender charges.
For policies with near maturity dates, experts recommend continuing the policy or converting it into a paid-up policy where no further premiums are paid but the policyholder still receives proportionate maturity benefits. As reported by SahajMoney, the goal is to stop future premiums, minimise surrender and tax damage, and route savings toward term cover plus other investments. Policyholders may also convert older or near-maturity policies into paid-up policies to clean up their legacy insurance portfolio while limiting tax implications and sunk-cost losses.
Endowment insurance plans are life insurance products that combine life cover and savings, designed as long-term plans to help meet distant financial goals such as education, marriage, and retirement. Under these plans, the nominee receives the death benefit if the policyholder dies during the policy term, while the policyholder receives the maturity benefit if he or she survives the policy term. The systematic approach to managing multiple endowment policies allows policyholders to build wealth more efficiently through suitable future investments while maintaining adequate insurance coverage for their financial goals.
