Do you intend to cancel your LIC policy before it matures? The term “surrender value” may be familiar to you. However, what is it, and how can you determine when to give up your policy? This article explains everything in simple terms, including what surrender value is and how to calculate it, along with some useful advice.
LIC Surrender Value: What Is It?
The amount you get from LIC if you decide to cancel (or surrender) your policy in the middle of its term is known as the surrender value.
You agree to pay premiums for a predetermined number of years when you buy a life insurance policy. But if you decide to cancel the policy in the middle of it—
When you no longer require your LIC policy (for example, you have a better plan), you might think about canceling it.
You can no longer afford to pay premiums.
Your financial objectives have evolved.
You’ve finished at least three years (LIC only permits surrender after that).
Pro Tip: It’s usually preferable to keep going rather than give up if you’re nearing maturity (just 1–2 years left).
How the LIC Surrender Value Is Determined
LIC uses our tool to determine your surrender value based on a standard formula. It is dependent upon:
- Total amount of premiums paid (not including the first-year premium)
- Type of policy (money-back, endowment, etc.)
- Years completed
- Declared bonuses, if any
You receive a portion of the bonus (if applicable) in addition to a percentage of the premiums you paid. This is known as the Special Surrender Value or Guaranteed Surrender Value.
Examples to Help Explain the LIC Surrender Value Formula
This is a simple formula for surrender value. LIC does the following:
(Total Premiums Paid – First Year Premium) × Surrender Value Factor + Bonus (if any)
For instance:
Just Assume:
- 15-year policy term
- You have paid ₹20,000 annually for five years, which comes to ₹1,00,000 total
- The first year’s premium is ₹20,000
- 30% is the surrender value factor (varies with years completed)
The surrender value is now equal to:
(₹1,00,000 – ₹20,000) × 30% = ₹24,000
Bonus: ₹3,000
Total = ₹24,000 + ₹3,000 = ₹27,000
👉 Please note that these values are merely examples. LIC regulations and policy type may affect actual figures.
How to Properly Use the LIC Surrender Value Calculator (User Tips)
You can save a great deal of time and get all of your questions answered by using our online surrender value calculator.
I try to show now. Here are some easy steps to get real results:
Advice for Users:
- Enter the accurate number of years that you have been a premium payer
- When entering total payments, do not include the first-year premium
- Select the appropriate policy type
- If you have any extra information, include it
- For bonus updates, ask your LIC agent if you’re unsure
Our LIC Surrender Value Calculator allows you to quickly determine your estimated value.
Simple LIC Surrender Value Calculation Example
Suppose you purchased a LIC policy and made the following premium payments:
- 15-year policy term
- Annual Premium Paid: ₹10,000
- You have paid for five years
- Thus, ₹10,000 × 5 = ₹50,000 is the total amount of premiums paid
- ₹10,000 for the first year’s premium
- 30% is the surrender value factor provided by LIC
- Bonus: ₹2,000, if applicable
Now I am using that formula to calculate my Total Surrender Value:
Now I apply: Are you Ready?
Surrender Value = (Total Premiums Paid – 1st Year Premium) × Surrender Factor + Bonus
= (₹50,000 – ₹10,000) × 30% + ₹2,000
= ₹40,000 × 30% + ₹2,000
= ₹12,000 + ₹2,000
= ₹14,000
Final Surrender Value You May Get: ₹14,000 — this is the final answer for this example.
Now Check Your LIC Surrender Value
Curious about how much you'll get back after 5 years?
👉
Check your LIC surrender value after 5 years with our free tool!
Now Noted: Simple People Asked Questions
1. When is the ideal moment to cancel a LIC policy?
After completing at least three years, the minimum lock-in period for the majority of policies, is the ideal time to surrender your LIC policy. To receive all benefits and bonuses, it is preferable to stick with the policy until the very end if it is nearing its maturity, such as with only one or two years remaining.
2. What is the new LIC policy surrender rule?
According to the most recent LIC regulations, you have three years from the start date to surrender the majority of traditional LIC policies.
The type of policy and the number of years completed are used to determine the surrender value.
If additional years are completed and bonuses are applicable, LIC now offers a better Special Surrender Value.
These guidelines are intended to provide the policyholder with a more equitable value at the time of surrender.
3. When should a policy be turned in?
Only when you are unable to continue paying premiums should you consider canceling your policy.
You've discovered a superior investment/insurance choice
Your objectives or financial status have evolved
You've had the policy for at least three years
4. After surrendering a LIC policy, how long does it take to receive money?
Surrender payments are typically processed by LIC in 7–10 working days after all paperwork is properly submitted. If your bank information and KYC have already been validated, it may be quicker in certain situations.
To prevent delays, be sure to:
Your policy is in effect and surrenderable
You supply all necessary paperwork, such as the surrender form, ID proof, and policy bond
Your bank information has been updated
