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How To Calculate The Value Before Surrendering An Endowment Plan

Updated On Jun 10, 2021

Undoubtedly, an endowment plan is helpful in various ways. It lets you invest your money and grow your savings for financial stability in the future while providing protective life cover. As an insurance plan, an endowment plan is a popular choice. However, it is not uncommon to let go of an insurance plan. Although it is not advised to do so, circumstances may demand such action. In such a case, you must calculate the surrender value of your endowment plan before giving up the plan. 

What is a Surrender Value?

The surrender value is an amount paid out if you stop paying premiums before the end of the policy term, that is, you essentially surrender your endowment plan. The amount depends on the number of years you have been paying premiums, the premium amount as well as the bonuses accrued. There are two types of surrender value, guaranteed and special or cash surrender value.

Process To Calculate the Surrender Value

Take a look at how you can calculate the surrender value for your endowment plan.

1. Guaranteed Surrender Value

A policyholder is eligible to receive a Guaranteed Surrender Value if they have paid the premiums for at least 3 policy years. The amount paid out is thirty percent of the basic premiums paid. It excludes the first-year premium, any bonuses applicable, and any additional premium from riders.

2. Special (or Cash) Surrender Value

In calculating the amount, you will receive under this, the first step is to calculate the Surrender Value Factor. This factor is calculated as a percentage of the paid-up value in addition to the bonus. It is not fixed and differs according to the insurance company. In general, it gains value and increases from the third policy year onwards.

The Special Surrender Value, then, is equal to the total number of premiums paid divided by the number of premiums payable, multiplied by the basic sum assured and added to the total bonuses to be received. The value obtained is then multiplied with the surrender value factor to get the final amount.


It is generally not advisable to surrender an endowment plan. Not only do you lose all the benefits and cover, but you will also lose a lot of your savings even if you shift to another plan. You might also have to pay more in premium if you have aged significantly.

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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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