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Updated on Jan 11, 2023
Wondering how to surrender LIC policy online? The procedure is easier than it looks initially. There are sometimes many reasons behind surrendering an LIC policy and if that is the case for you, then here is some help at hand.
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LIC policy surrender means opting out of your LIC policy before its maturity. The amount received in one such situation is the LIC policy surrender value. Once you undergo your LIC policy surrender, you would not be able to revive it in the future. However, before you surrender your LIC policy, you need to be aware of the fact that you will not get the original benefits which are much higher as compared to the surrender value.
Also Read: Step by Step Process to Check LIC Policy Status Without Registration
The terms and conditions of all LIC policies vary. Therefore, before you decide to buy one, you must go through them very carefully. The period of policy surrender depends much on the premium paying terms and time of purchase of the policy. To surrender a LIC policy, the usual situations are mentioned herein below:
Under a limited period and regular plan, each policy will have its own terms and conditions. However, in most cases,
If the tenure of the policy is 10 years or less, the duration of surrendering the policy is 2 years
If the tenure of the policy is more than 10 years, the duration of the surrender of the policy is 3 years.
Under a single premium plan, you can surrender a policy only in the second year of buying it.
LIC (Life Insurance Corporation) of India is one of the most trusted investment avenues for Indian citizens. The company offers various kinds of insurance and investment plans for its customers. Why do then people search for how to cancel LIC policy or how to surrender LIC policy?
Is it then possible to cancel or surrender your LIC policy before the date of maturity or conclusion of the tenure? The answer is naturally Yes.
The documents that you have to submit while surrendering a LIC policy are:
Also Read: LIC vs. Private Insurance Companies in India
Surrender Value = {The Basic Sum Assured x (The Number of Premiums Paid/The Total Number of Premiums Payable) + The Total Bonus received} x-Factor of Surrender Value
Also Read: What Are the Late Payment Charges for LIC Premium?
Here are some things to know if you were wondering how to close your LIC policy online:
Also Read: How to check the Surrender Value of LIC Policies?
There are quite many reasons to not surrender your LIC policy. Some of them are here.
In case you are reconsidering surrendering your LIC policy, you can actually go for an alternative idea. You can stop paying premiums for your LIC policy; however, your life cover will be continued. While you do that, your policy will become a paid-up policy. Nevertheless, the sum assured, which is also called paid-up value, decreases under a paid-up policy. Even if you do not pay the premiums, the life cover will go until the policy term is over. If the policyholder passes away during the policy tenure or on the maturity of the LIC policy, the paid-up value is offered to the nominee/policyholder.
Once you surrender your LIC policy, the insurance coverage will no longer exist and you will get the surrender value credited to your account. Also, the same policy cannot be restarted or revived. All the benefits will also cease to exist. The surrender value you get is considerably lower than the premiums paid by you. Hence, surrender your policy after thinking things through and only after taking proper financial advice.
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LIC policy can be surrendered online from the 3rd year of the policy onwards. However, the minimum duration of the policy should be 3 years and in case of longer tenures it can be 10 years and beyond.
If a policyholder surrenders his/her LIC policy before maturity date, the life cover immediately comes to a halt and the insured won't be able to revive it in the future.
A LIC policy can be surrendered after being in force for 3 years. Here, the surrender value received is equal to 30% of the total premiums paid excluding the paid premiums of the first year.
The surrender value of LIC policy can be calculated using the below formula:
[Basic sum assured (Number of premiums paid/Total number of premiums payable) + Total bonus received] x Surrender Value Factor.
Your policy will continue; however, the benefits you get will be reduced.
You will get a 100% special surrender value. However, this will only happen if you have paid the premiums regularly.
You will get a certain grace period within which you can make the premium payment. On crossing the grace period, the policy will get lapsed.
It is certainly not a great idea to surrender your LIC policy. You can rather choose not to pay the premiums anymore, which let the policy be.
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.
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