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Does It Make Sense To Surrender An Endowment Policy?

Updated On Jun 13, 2021

Endowment plans are highly beneficial insurance plans. Not only do they give a valuable opportunity for investing your earnings but provide several benefits and protective life cover. It is a sustainable option to ensure financial stability and security. However, in case you do not want to continue with an endowment plan, you can always surrender it.

To surrender an endowment plan is simply to discontinue paying the premiums. The endowment plan, then, ceases to cover and provide benefits. A surrender value is also given out.

What is the Surrender Value of an Endowment Plan?

If the policyholder stops paying premiums for their endowment plan, during the policy term, they may surrender their policy. On doing this, you will receive a surrender value. There are two types of surrender values- guaranteed and special. They are both calculated separately and according to certain formulas. The final amount depends on several factors such as premium amount, premiums paid, bonuses and more.

Should You Surrender Your Endowment Plan?

It is generally advisable to not surrender an endowment plan. This is primarily due to the following reasons:

  • On surrendering your endowment plan, you immediately lose all protective cover it provides. Although you can always buy another plan, you are left unprotected for quite a while before your new plan gets approved.
  • Any new insurance plan you purchase might cost you more. This might happen due to you getting older or other risks such as health conditions and more.
  • All premiums that you had paid for your endowment plan will be lost. While you can always gain it back with a more beneficial insurance plan, it is a significant risk. 

You can always purchase a new insurance plan after surrendering an old one. Oftentimes, an old endowment plan might feel wrong or ill-suited for our financial needs. When choosing a new plan, make sure to look for one that has better returns and benefits. However, the above points are to be kept in mind if and when you purchase a new insurance plan. 

What is Paid Up Value?

Even if you cannot continue paying your premium amount for some reason, you can continue your plan at a reduced value. This is known as the paid up value, and is essentially a reduced value of the premium you were having to pay. You can continue your plan with this reduced rate.


Surrendering an endowment plan is not a very rare occurrence. However, before taking such a step, you must carefully consider all factors involved. It is advisable to surrender the plan only if it is beneficial and profitable for your savings.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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