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How Is Surrender Value Calculated Under A Term Insurance Policy?

Updated On Sep 19, 2021

Surrendering a term insurance policy implies ending the association with your insurance provider. While many reasons why a policyholder can surrender his/her policy, such as the policy not providing adequate coverage, the policyholder cannot pay the premium sum. Surrendering a policy that is close to its maturity period causes you to lose a lot of advantages.

A surrender value is usually the sum owed by the term insurance provider when you decide to surrender or give up on your term insurance policy. Whenever you surrender your term insurance policy, you receive a certain amount of premiums that you regularly paid back from the insurance provider. This receipt of payment is known as a surrender value.

How is Surrender Value Calculated?

All those policyholders looking for ways to calculate the surrender value of term insurance must note that calculating the surrender value in the present technologically advanced times is extremely easy.

You can now calculate the exact surrender value in minutes with the help of an effective cloud-based tool that is known as a surrender value calculator. You can instantly access this cloud-based surrender value calculator online to check the surrender value.

To obtain this information, all you require to do is present some basic details like the policy term, amount of the premium paid, premium payment mode, number of years the policy has completed, premium installment amount, etc., exact value.

Once you present all these details, the online surrender value calculator immediately determines your term insurance policy's surrender value.

When does a Term Insurance Policy Acquire a Surrender Value?

A term insurance policy acquires a surrender value in the following two scenarios:

1. When The Policy Duration Is 10 Years Or More

In this situation, the surrender value of the term insurance policy is obtained if the premium amount is regularly paid at least for three consecutive years.

2. When The Policy Duration Is Less Than 10 Years

In this situation, the term insurance policy gets a surrender value if the policy's premium amount is regularly paid at least for two consecutive years.


To state the obvious, giving up or surrendering your term insurance policy is not at all a rational decision, especially when it's close to maturity, as you never receive the entire sum that you paid as premiums. However, if you think your policy is not yielding decent returns, you can consider making such a decision or you can buy a new term insurance policy to suit your financial goals.

You may also like to read - How To Choose The Best Life Insurance Company?

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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