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Generally, only a fraction of bonuses is paid on surrender of endowment plan

I bought an endowment plan 10 years ago; it will mature 10 years later. Can I surrender it? What is the surrender value I’ll get? The plan also earns bonuses. Will I get the bonuses when I surrender?

—Naaz Khan

Yes, surrender is allowed under endowment plans. The surrender value is pre-determined and shared in the policy schedule. There is a guaranteed surrender value which you must get but insurers often give a special surrender value over the minimum value. Surrender value, typically, increases with the number of years of paid premium. Generally, only a fraction of the earned bonuses are payable on surrender.

The decision to surrender will depend on the value you get. You would need to compare the surrender charge with the additional returns that you may get elsewhere.

How many illnesses do critical illness plans cover? How should I choose a plan?

—Raunaq Kishore

The number of illnesses covered under a critical illness plan varies across different plans. Most plans offer coverage for at least 10 illnesses, but some cover more than 30 illnesses. The commonly covered illnesses include stroke, first heart attack, cancer, major organ transplant, coma and kidney failure. The less common ones include Alzheimer’s, Parkinson, and severe rheumatoid arthritis.

You should check and compare the list of illnesses covered under different critical illness plans and prefer a plan that covers the maximum number of illnesses, particularly diseases that do not require hospitalization and would not be insured by a regular mediclaim plan. You should compare the survival period of various plans. Survival period is the threshold that the insured person has to survive after the diagnosis of the illness for the claim to be payable. Prefer a plan with a low survival period threshold. Insurers offer a threshold as low as 15 days.

Abhishek Bondia is principal officer and managing director, Queries and views at [email protected]

Source: livemint