It makes sense to surrender the policy ahead of its term, especially as she has no need of pension. HDFC Life Classic Pension Insurance Plan is a traditional pension plan with inbuilt insurance. Any retirement plan which has inbuilt insurance should be avoided. Such policies are costly and lack transparency as well.

After 3 years, this policy acquires a Guaranteed Surrender Value. The Guaranteed Surrender Value including the value of any attached bonus is 50 percent of all premiums paid excluding the first year's premium. The insurer might also pay a non-guaranteed surrender value at its discretion. Even if she invests this surrender value in a bank fixed deposit she will earn more than the sum assured.

In future, stay away from any investment linked insurance plans.

For your long term investment to build up a corpus towards retired life, you can invest in a balanced fund if you can take some risk. Choose a top-rated balanced scheme and start investing every month via a Systematic Investment Plan (SIP) if you are a first time investor in mutual fund.

You can place a complaint with the ombudsman about mis-selling, however, the insurance company will argue that it is the responsibility of the policyholder to read through the policy document in the free look period. And the verbal claims of an agent cannot be proved.