What is LIC Surrender Value And How To Calculate it?

Life Insurance Corporation (LIC) is one of the most trusted and renowned insurance companies in India when it comes to buying life insurance plans. LIC offers a wide range of insurance products, including Endowment Policies, Term Plans, and more. One essential aspect of any life insurance policy is the “Surrender Value”, and calculating it can be crucial for policyholders. 

So, let us understand what LIC Surrender Value is and how to calculate it using the LIC Surrender Value Calculator.

What is LIC Surrender Value?

The LIC Surrender Value represents the amount that policyholders are entitled to receive from the Life Insurance Corporation (LIC) if they opt to terminate or surrender their insurance policy before it reaches maturity. This value is essentially a benefit extended to policyholders who decide to discontinue their policies for various reasons, providing them with a financial sum in return.

When individuals are thinking about the purchase of an insurance policy from LIC, the Surrender Value becomes a significant factor in their decision-making process. The reason behind this consideration lies in the impact that the Surrender Value has on the liquidity of the investment.

In simple terms, Surrender Value impacts how easily you can access your money and still get some life insurance benefits, even if you decide to end the policy early.

What Happens When the LIC Policy is Surrendered?

Upon surrendering an LIC policy, the following outcomes occur:

• LIC insurance coverage comes to an end
• The policyholder receives the surrender value
• There is no possibility of reviving the policy
• All the benefits specified in the policy cease to be applicable

Why is LIC Surrender Value Important?

Understanding the Surrender Value is important for policyholders because it enables them to make informed decisions about their life insurance policies. Here are a few reasons highlighting the significance of LIC Surrender Value calculation:

• Financial Reimbursement: The Surrender Value is important because it allows policyholders to receive a portion of their invested money back if they choose to terminate their insurance policy before its scheduled maturity. This can be especially valuable in situations where the policyholder may need access to funds for various reasons.
• Flexibility and Freedom: Life circumstances can change, and having the option to surrender a policy provides individuals with the freedom to adapt their financial plans accordingly. It moreover ensures that the policyholder is not locked into a long-term commitment if their needs change.
• Decision-Making Factor: The Surrender Value plays a significant role in the decision-making process for potential policyholders. Knowing that there is a financial benefit in the form of Surrender Value can influence individuals when choosing an insurance policy. 
• Enhanced Liquidity: Surrender Value enhances the liquidity of the investment. It allows policyholders to convert a portion of their life insurance policy into cash, providing a source of immediate funds. This liquidity can be valuable in case of emergencies.

Types of LIC Policies and Surrender Value

LIC offers various insurance policies, each with different Surrender Value calculations. Here are some common LIC policies:

1. Endowment Policies

Endowment policies combine life coverage with a savings component. The Surrender Value for endowment policies typically becomes payable after a specific number of years. The exact Surrender Value calculation depends on the policy's terms and conditions.

2. Term Insurance Policies

Term insurance policies are pure protection plans with no savings component. They do not have a Surrender Value, as the primary purpose is to provide financial protection to the policyholder's family in case of their demise.

3. Whole Life Policies

Whole-life policies provide coverage for the entire lifetime of the policyholder. The Surrender Value for these policies is typically determined after a specific policy term.

4. Jeevan Saral Bima

Jeevan Saral is a popular policy offered by LIC, well-known for its flexibility. It provides a Maturity Sum Assured, and the Surrender Value is based on the number of premiums paid. The LIC Surrender Value Calculator can be particularly useful for Jeevan Saral policyholders. 

How to Calculate the Surrender Value of LIC?

The  LIC Surrender Value Calculator is a user-friendly tool provided by LIC to help policyholders determine the Surrender Value of their policies. 

Here's how to use it:

Step 1: Access the LIC Portal

Visit the official LIC website, where you can find the LIC India Surrender Value Calculator. Before using the LIC policy surrender value calculator, make sure you have your policy details handy.

Step 2: Enter Policy Details

Enter the relevant policy details, including the policy number, premium payment term, and sum assured. Ensure you provide and enter the accurate details. 

Step 3: Calculate Surrender Value

Once you have entered the required information, the LIC Surrender Value Calculator will provide you with the Surrender Value of your LIC policy.

Step 4: Consult an LIC Representative

If you have any questions or doubts about the Surrender Value calculation, it is advisable to consult an LIC representative or an InsuranceDekho representative who can provide further clarification and guidance on how to use the tool. 

Benefits of LIC Surrender Value Calculator

The benefits of using the LIC policy Surrender Value Calculator via online mode are as follows:

• Instant Results: Online calculators provide results in no time, allowing you to quickly understand the potential Surrender Value of your LIC policy.

• Accuracy: The calculations are highly accurate as they are based on the most recent data and formula provided by LIC. Accurate information is crucial for making well-informed decisions about your insurance coverage.

• Convenience: You can access the Surrender Value calculator at any time, from the comfort of your home or any location with an internet connection, making it highly convenient to use. 

Factors Influencing Surrender Value

Several factors influence the Surrender Value of an LIC policy. It is important to be aware of these factors as they can significantly impact the final amount you receive upon surrendering your policy:

1. Policy Term

The longer the policy has been in force, the higher the Surrender Value is likely to be. This is one of the reasons why LIC policyholders tend to choose a policy with a longer policy term. 

2. Premiums Paid

The total premiums paid towards the policy can affect the Surrender Value. Higher premiums paid may result in a higher Surrender Value.

3. Sum Assured

The sum assured or the coverage amount is another factor that plays a role in determining the Surrender Value. Higher coverage may result in a higher Surrender Value.

4. Policy Type

Different LIC policies have varying Surrender Value calculations. For example, Endowment Policies have different rules than other life insurance policies.

5. Bonus and Loyalty Additions

LIC often declares bonuses and loyalty additions on certain policies. These can boost the Surrender Value significantly.

How to Surrender LIC Policy?

Usually, people buy LIC policies without fully checking the terms and conditions, leading to the closing of the policy earlier than maturity. At this stage, LIC gives a particular amount from the total to the policyholder. This amount is known as the “Surrender Value”.

Usually surrendering the policy takes place due to dissatisfaction with the policy's features. Always remember to check all the terms properly before taking a policy.

Note: Policyholders can only surrender their policy after consistently paying their premiums for almost three years.

Here’s how you can surrender your LIC policy:

Step 1: Start by visiting the LIC branch with your Policy Bond. Make sure you visit the branch from where you have purchased your policy.

Step 2: Take the LIC Policy Surrender Form and fill it with accurate details.

Step 3: To surrender your policy, submit the identity proof along with a copy of cancelled cheque with your name on it. 

Step 4: Once you have completed all the formalities, the cash will be credited to your account within 7-10 days. 

This is how you can surrender your policy!

Conclusion

Understanding the LIC policy surrender value is important, as it can impact your financial planning and decision-making. The LIC Surrender Value Calculator is a valuable tool that empowers policyholders to make informed choices about their insurance policies. The calculator is available online and can help you check the surrender value easily.

Whether you have an endowment policy, a Jeevan Saral policy, or any other type of LIC policy, knowing how to calculate the Surrender Value can help you assess the financial benefits of your insurance investment. 

Frequently Asked Questions (FAQs)

Ques. Is LIC surrender value beneficial?

Ans. Yes, LIC surrender value becomes beneficial when you terminate your existing LIC policy before its policy term.

Ques. What are the different types of LIC policies?

Ans. The different types of LIC policies include Endowment, Term Insurance, and a few more.

Ques. How can I calculate the LIC surrender value?

Ans. You can use the LIC Policy Surrender Value Calculator to calculate the LIC surrender value.