I am very much sure that all you must have existing insurance policies. And these may not have been giving you decent return life insurance cover, nor do they providing you the kind of return as you desire Now, in this article, you have an opportunity to get rid of those kinds of policies that do not meet both these criteria.
 
Filtering bad policies
Whilst reviewing of existing insurance policies, firstly, you have to identify such policies having low on cover where you are paying very high premium for coverage. So coming to your personal case now, you have to understand how to think about the life insurance policy and what factors to look at while cleaning up. Focus on other aspects also like liquidity, partial withdrawal aspect and simplicity. At last, list your policies and make a note of which junk policies you would like to discontinue and not pay further premiums or surrendering the same. Better do the math and find out which situation works on your case.
Is stopping a policy good decision?
That’s a very emotional way of looking at it. Taking a corrective measure is not the easy because the damage does not seem to be big instantly; short-term pleasure of not doing anything is so great that people just mess up things more for longer. While stopping the further premium or surrender the policies, your pain may be huge, but it will suddenly be available for new opportunities and you will now have additional money (which you were putting in these policies) can be used for other meaningful purposes like funding your financial goals. You can also enable to invest your money for the remaining period in some other financial product.
What choice you make?
This will surely alarm anyone and you would surely be de-motivated to stop the policy, but here, we will try to minimize your loss and try to find out best you can do about it. Here is an indicative action that you can use, but make sure you do the calculations yourself before taking any action.
·        Continue paying the premium
In this case, you will to continue paying hefty premium for remaining years, and at the end you will get paltry sum, with low coverage. So you are happy in short term that there is no loss while staying with the same policy. Its coverage may have generally Rs5-20 lacs. In the fast-paced world with so many necessities, it would last for even 1-4 years. So it falls short of your need from a life insurance point of view. If you look at it from a return point of view, just imagine 10, 15 or 20 years from now when you actually get money from these policies at their maturity, will it help you, considering that you will continue to lead an expensive life even into the future. So even from capital growth point of view, these policies are not serving you.
In this choice, you have to make some tough decision and restructure things. The primary thing is to get a decent life cover while taking an online term insurance plan for 20-23 years depending upon your retiring age.  And the salvage value of these policies can invest in a PPF, fixed deposit or equity mutual funds.  Better to choose PPF and equity mutual funds as both are eligible for tax savings under sections 80C and their maturity is also tax-free just like insurance policies.
Conclusion
At glance, if you paid very few premiums just 1-3 years for the policy, you should stop the same and take appropriate action. Paying premiums more than 4-7 years, make it paid up and do not make further premium payments and finally, if you are near to maturity, you must continue the policy. 
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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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