Calculate the Surrender Value for My Endowment Policy

1734

4 min read

Do you have an endowment plan that you want to surrender now? Well, that’s absolutely possible! Many people stop paying the premiums before the policy term is over. In that case, they get a payout on the basis of the number of years they paid the premiums as well as the bonus they earned.

An endowment policy surrender value calculator can also be used to find out the approximate or precise value that they will get. To know more about it, please keep on reading.

There are two forms of surrender value; guaranteed surrender value and special surrender value. The guaranteed surrender value is straightforward when it comes to calculating and you may even find it in a policy bond or a product brochure. On the other hand, the special surrender value is calculated only after the endowment surrender request is submitted by a policyholder.

Visual Stories by PayBima

How Can I Calculate the Surrender Value for My Endowment Policy using the Endowment Policy Calculator?

Although you can use an endowment policy surrender value calculator, here are some of the ways explained to calculate the surrender value of an endowment policy.

1. Guaranteed Surrender Value

Your eligibility for this option depends on the premiums that you have paid for a minimum of three years. It is equal to 30% of the basic premiums that are being paid, apart from the premium that was paid in the first year. If there are additional premiums like accidental death benefits, they will not be included. The bonuses received will not be included. In case you get a bonus out of your insurance which you earn over the period of the policy term, the special surrender value will be the amount that you get if you surrender it early.

Know More: Endowment Policy or Term Insurance Policy

2. Special Surrender Value

Also called Cash Surrender Value; before we discuss this, we should try to understand what paid-up value is. In case you stop paying your premiums for a certain period, the policy will continue; however, the sum assured will get lesser. You would often come across terms like paid-up sum assured or paid-up value, which means the smaller or lesser sum assured. The actual sum assured is multiplied by the ratio of the premiums paid to premiums payable that arrive at the paid-up value. The surrender value is the proportion of the total value of the contract and the bonus.  In the initial three years, it is zero. After the completion of three years, it starts rising.

Read More: What is an Endowment Policy, and why should you get it?

3. Surrender Value Formula

As the surrender value formula is concerned, here it is mentioned below:

  • Bonuses accumulated on the policy and paid-up value multiplied by the surrender value factor
  • The basic sum assured is multiplied by the number of premiums that have to be paid on the policy.

4. Surrender Value Calculator

A surrender value calculator is an online tool that you can use for calculating the surrender value of an endowment policy. This tool is considered to be effective and you can have access to the websites of the companies that sell life insurance plans. The only thing that you would be required to do is to provide the required basic information. Once done, you can calculate the said value in just a few seconds. If you are using this tool to know the surrender value on the endowment policy, the details that you need to provide are the name of the plan, the term of the policy, the number of premiums that have already been paid on the policy, the mode you chose to pay the premiums, installment amount you paid on each of the premiums, and years for which the policy has been continued. Once these details have been submitted to the tool, the surrender value of the endowment plan will be calculated in just a few seconds.

Read More: Endowment Plan Claim Process – A Step by Step Guide

Details to be mentioned in the surrender value calculator

Mentioned herein below are the details that you have to provide in the surrender value calculator.

Details Needed in the surrender value calculator
Name of the plan
Policy term
Number of premiums being paid in the policy
Mode of paying the policy
Installment amount for each premium
Number of years for which the policy is being continued

Now that it is assumed that you have an idea of what a surrender value calculator is and how you can find out the surrender value that you will get out of your endowment plan, all that you need to do is to use the calculator.

Calculating your endowment plan’s surrender value can help you find the realistic amount that you can expect to have from your endowment plan. With this, you can plan if you wish to utilize the amount for meeting your personal goals or invest it further for higher returns.

Popular General Insurance Companies India, 2023

 

View this post on Instagram

 

A post shared by paybima (@paybima)

FAQs: Endowment Policy Surrender Value Calculator

What is a surrender value?

Surrender value is the amount that is payable to you if you want to discontinue your endowment plan before the term is over. It includes the premiums that have already been paid and the interest or bonus amount earned.

How to calculate surrender value?

You can easily calculate the surrender value by using the surrender value calculator. A calculator is an online tool that calculates your surrender value by looking at the number of premiums paid, premium amount, and bonuses.

Does tax need to be paid on surrender value?

Tax does need to be paid on the surrender value as it will be considered “income from other sources” and taxed under the relevant Income Tax bracket. The surrender value does not get any tax exemption under Section 10(10D) of Income Tax law.

Is surrender value higher than cash value?

The surrender value is usually lower than the cash value of the endowment plan. The surrender value is the amount that is paid out to you upon the termination of the policy. In contrast, the cash value is the amount of equity accumulated in the fund. 

What are the types of surrender values?

There are two types of surrender value, called Guaranteed Surrender Value and Special Surrender Value. The guaranteed surrender value is the minimum amount payable to you according to the policy term. The special surrender value on the other hand is the discretionary amount offered by the insurer upon exiting the plan.

Other Investment Products

Dec 27, 2022
SHARE THIS ON
Author Bio
Author Image

PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

Related Blogs

Would love to hear from you

Share your candid feedback. Your email address won’t be published, we promise!

All fields are required

Find your suitable insurance plan

Speak to our advisor

Latest Posts

Mahindra Insurance Brokers Limited (A Mahindra Group Company) - Unit-202, A-Wing, 2nd Floor, Amiti Building, Agastya Corporate Park, Kamani Junction, LBS Marg, Kurla West, Mumbai - 400070. Tel: +91 22 66423800

Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).

Insurance is the subject matter of solicitation.

For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.

Copyright © 2024 Mahindra Insurance Brokers. All Right Reserved.

Get A Call Back
Get A Call Back