How to Find Surrender Value of LIC Policy using the Calculator and Process to Check the LIC Surrender Value, 2024


13 min read

Updated on Jan 22, 2024

Surrendering a LIC policy is not recommended. However, sometimes policyholders want to surrender policy to invest in other products with greater returns. In this post, we are discussing the steps to follow to surrender LIC policies and how to calculate LIC surrender value. 

LIC or Life Insurance Corporation of India is considered one of the most reliable insurers in India with high repute. The company offers varied plans and products to secure the lives of individuals and their families. LIC plans are available for different tenure with varied coverage options to benefit the policyholders accordingly.

Investing in LIC plans is important because they serve  as securities against unforeseen life situations. However, sometimes people jump into an LIC plan without much consideration and later look for ways to surrender it.  When a policy is surrendered, it gets dissolved before expiry/maturity.  Let us discuss in this post, the process to surrender a LIC policy in detail.

What is Meant by Surrendering a Policy? Are Surrendering Policies Allowed in Insurance?

Individuals purchase LIC policies for financial security. However, it so happens that sometimes the chosen plan doesn’t fit their requirement or expectation. They feel they could invest in better plans to gain better returns. In that case, a policyholder can end a LIC policy before the maturity period.

Surrendering LIC policies before maturity is possible. However, in order to receive the surrender value of the plan it is necessary to continue the policy for 3 years after purchase. The process of ending or surrendering the plan before its maturity is called policy surrender and the benefits earned by surrendering a policy is called surrender value or return. A LIC surrender value can be calculated by using a LIC surrender value calculator.

Read More: How to Surrender LIC Policy Online Before Maturity

What is Surrender Value in LIC Policy?

Surrender value in a policy means the amount that a policyholder receives back from the life insurer in case the person exits from the policy before maturity. So, if a policyholder decides to stop a LIC policy after 3 years of continuing with the plan, the policyholder is likely to get a refund back in the form of surrender value.

This surrender value include a part of the premium amount that is paid by the policyholder during the initial years of the policy when the policy was active. The insurer pays this amount back to the policyholder after making the necessary deductions. However, the policyholder should have cleared all the premiums for the 3 initial years of the policy. Once the LIC plan is surrendered, the insurer pays the surrender value to the insured and policy gets terminated completely.

What is the surrender value in life insurance plans?

What Happens When A Policy is Surrendered?

When a policy is surrendered, the insurer pays the surrendered value to the insured. Immediately after that the coverage of the policy stops with no policy revival option in the future. Further, all the benefits applicable with the policy also cease to exist.

Know More: How to Surrender LIC Policy Online Before Maturity 

LIC Surrender Value Calculator

Many policyholders get confused calculating their LIC surrender value, so we advise them to use this online LIC surrender value calculator for their respective policy.

Why is LIC Surrender Value Important?

A person investing in an LIC plan is not keen to surrender it midway, but what is it that now people prefer investing money in an LIC plan with a surrender value? We will talk about this by throwing light on the importance of an LIC policy surrender value:

  • Offers Flexibility for Better Financial Planning: The prime benefit of opting for a LIC Surrender Value plan is that it offers the policyholders financial flexibility with the ongoing life changes. The policyholder can enjoy the much-needed liquidity in times of financial need. 
  • Help Avail Emergency Funds: There can be times when you face some emergencies and want some funds for unexpected expenses. In that case, surrendering an LIC plan with a surrender value can come as a quick solution to access some cash. 
  • Makes Way for Better Investment Options: An LIC policy with a surrender value helps the policyholder enjoy the features missing in the existing plan by surrendering it and opting for a better plan.
  • Helps to Exit Rather than Face Policy Lapse Charges: Sometimes the policyholder experiences difficulty in paying the policy premiums due to financial crunch. In that case, a LIC plan with a surrender value comes as a relief because he/ she can easily exit rather than face charges for policy lapse due to non-payment of the premium on time.

Types of LIC Policies and Surrender Value

LIC offers different types of insurance policies to meet the varied needs of the policyholders. The surrender value for a LIC policy also varies depending on the type of policy and its duration. Have a look at the common  types of LIC policies and their surrender values:

Type of LIC Policy Surrender Value
  • Term Insurance Plan
These plans generally don’t come up with a surrender value because they are pure protection policies having no saving component
  • Whole Life Insurance Plan
The surrender value of such plans depends on factors such as the amount of premium paid and the policy tenure
  • Money Back Plan
The surrender value for money-back plans is available but is lower as compared to the total premium paid, especially in the initial years of the policy. 
  • ULIPs (Unit Linked Insurance Plans)
The surrender value for ULIPs depends on the performance of the investment made.  The thumb rule here is that the longer the policy tenure, the higher the surrender value 
  • Endowment Plans
The surrender value on endowment plans is generally available only after completing some premium payments over some years. 
  • Pension Plans or Annuities
The surrender value on pension plans may vary and some plans may offer surrender value benefits only after a specific period

Disadvantages of Surrendering LIC Policy

Surrendering a LIC policy is not recommended. However, if the policyholder wants to end the policy due to any unavoidable circumstances, it is possible to end the policy and to receive the surrender value.

However, there are certain demerits of Policy Surrender as mentioned below:

  • Surrendering a policy brings an end to the purpose of buying a policy, which is financial security to the policyholder and his/her family.
  • If a policyholder surrenders a plan before completing 3 years of the policy due to unavoidable reasons, he/she is not likely to get anything and the surrender value becomes zero
  • If a policyholder surrenders a particular plan and later wants to invest in the same plan after many years, he/she would have to pay enhanced premium amount for the plan depending on certain factors
  • Depending on the terms and conditions applicable to a policy, acquired bonuses are provided. If a person surrenders a LIC policy before maturity, he/she would not receive any bonus. Only a small portion of the premium would be paid back by the insurer

Also Read: LIC premium receipt download 

Kinds of Surrender Value

There are two kinds of surrender value. They are;

  1. Guaranteed Surrender Value and
  2. Special Surrender Value

1. Guaranteed Surrender Value

If an insurer opts for guaranteed surrender value, he or she is compensated with a predetermined sum known as the Guaranteed Surrender Value if the policy is terminated prior to the policy’s maturity.

The LIC brochure states:

30% X the total amount of premiums paid is the Guaranteed Surrender Value.

All additional premiums, premiums for accident benefits, and term rider premiums are not included in the first-year premiums or any other premiums.

Depending on the insurance type and the year of surrender, the proportion that will be paid may vary. The percentage, which is directly proportionate to policy standards, is typically known as the surrender value factor. This also suggests that as the policy matures, the proportion to be paid would steadily grow.

How is Guaranteed Surrender Value Calculated?

As an illustration, suppose Rohan purchased the LIC’s Jeevan Amar plan. The policy has a 20-year term. His yearly payment is INR 35,000 inclusive of taxes. Let’s assume that he decides to cancel his insurance policy after the third year. Considering that he is expected to get money, or Guaranteed Surrender Value. It is calculable as;

Formula to calculate Guaranteed Surrender Value:

Amount/surrender value factor * (original amount*length of time spent)

= 30 %*( 35,000*3)

= INR 31,500

30% is the percentage/surrender value component.
If Rohan must get any vested bonuses as well, the surrender value for vested bonuses will be determined as follows:

When an insurer’s policy reaches maturity, they are entitled to receive a bonus known as a vested bonus. Assume Rohan’s insurance has a bonus value of INR 65,000. Assume that any accrued bonuses have a surrender value factor of 18%. Calculations for the surrender value include;

The surrender value (18%) is equal to the percentage of the surrender value (accumulated bonuses)

= 18 %*( 65,000) ( 65,000)

= INR 11,700

2. Special Surrender Value

Special surrender value is applied to policies that the insured has stopped paying premium for after a certain period of time.  In this case, the policy continues however the sum assured of the policy decreases. Now, if the policyholder surrenders the plan, it is called a special surrender value, which is greater as compared to the guaranteed surrender value.

Formula to calculate Special Surrender Value:

{(Sum*Number of installments) + bonuses (if any)}*surrender value factor/percentage.

How is Special Surrender Value Calculated?

Using Arijit as an example, let’s say he invested the guaranteed sum of INR 15, 00,000 over 15 years under the LIC’s New Jeevan Anand insurance plan. Suppose he must pay INR 50,000 each year, which he will do over the three- year period. Consider a scenario in which he decides, in the fourth year, for whatever reason, to cancel his New Jeevan Anand policy.

The following formulas can be used to determine the special surrender value:

Special surrender value is equal to (15,000,000*(4/15) + 40000)*40%.

=INR 176,000

Let’s say the proportion or value of surrender is 40%.

Let’s say the bonus is INR 40,000.

You may now easily determine the value of your surrender value using the procedures demonstrated in the two situations mentioned above. Always be aware of what you want, what you purchase, and how it compares to other financial products for returns. To comprehend the entire policy and its surrender penalty provision, you might seek the aid of a planner.

LIC Surrender Value Calculator: How to Calculate the Surrender Value of LIC Policy?

It is possible to surrender LIC policies anytime. To calculate LIC surrender value, a policyholder can use a LIC policy Surrender Value calculator. These calculators allow a fair estimate of the value received if a particular policy is surrendered. The policyholder can provide certain policy related information to calculate the amount.

We can submit the below information to check the value of LIC policy surrender value with calculator online:

  • Name of policyholder
  • Contact number
  • Type of Policy
  • Tenure of policy
  • Premiums paid
  • Mode of payment
  • Remaining premiums left
  • Policy duration completed

Once the policyholder enters these details, the calculator would compute the rough estimate of the surrender value.

Steps to Surrender LIC Policy Offline

Below are the steps to surrender a LIC Policy offline:

  • Visit the branch of LIC where you bought your policy from with your Policy papers/bond. You must visit the same branch that you got your policy from
  • Ask for the surrender form called the surrender discharge voucher. You can even download the form from the LIC website
  • Also, you need to submit your ID proof like an AADHAAR card or PAN Card along with a copy of cancelled cheque with your name written on it
  • Once the formalities of policy cancellation is done, the surrender value of LIC policy will be paid at the account of the policyholder in 7-10 days

LIC Surrender Value Calculator Online: How To Check LIC Policy Surrender Status Online?

The steps below can be followed to surrender your LIC policy online:

  • Visit the official LIC portal
  • Click on the tab of  ‘login’ if you are a registered user, else register as a new user
  • Select the tab of ‘Enrol Policies’ and  go to ‘Click to Enrol New Policies’ tab and proceed
  • Now, submit the details mentioned there like policy number, premium amount, and name of policyholder etc.
  • Click on the ‘Enroll your policy’ tab
  • Now you can click on ‘view enrolled policy’ and go to  the loans and Bonus section. Go to the ‘click for details’ tab
  • Here, you can check the eligibility as well as surrender value of the policy

People also like to know how to check the surrender value of LIC policy online. For this, you can either visit the LIC official portal or the particular insurer portal where you got your policy from. Further, you can call customer care or visit the nearest LIC branch for more details.

Example of the Surrender Value of LIC Policy

The following example will help you understand better about the surrender value of an LIC policy:

Let us take for instance, Swarit has invested in the LIC Bima Jyoti Endowment Plan for 15 years for a guaranteed sum of Rs. 20 lakhs. He has to pay Rs. 50,000 annually for three years, but if in the 4th year, he wants to surrender the LIC Bima Jyoti Policy due to some reasons, then the surrender value will be calculated in the following way:

Special Surrender Value Formula: (Sum * Number of Installments) + Bonuses (if any)* Surrender Value or Percentage

So, in this case: 

Special Surrender Value: (20,00,000 *(4/15) + 40,000 * 40% = Rs. 2,29,333

Let us assume the surrender value factor here is 40% and the bonus collected is Rs. 40,000

Using this example, you can easily calculate the surrender value on your LIC policy.

Top LIC Investment Plans and Products

If you are looking at buying a LIC policy or want to surrender your current plan to buy a new one for the coming financial year, below are some top LIC plans to choose from.

LIC Policy Type of Plan Policy Term Entry Age Maturity Age Sum Assured 
LIC Bima Jyoti Plan Endowment Plan 15-20 years 90 days (completed)-60 years 75 years Min- Rs.1,00,000 Max- No upper limit
LIC Jeevan Labh Traditional savings plan 16, 21, or 25 years 8 years-59 years 75 years Min-Rs.2,00,000 Max- No Upper Limit
LIC SIIP Plan Unit-linked insurance plan 10-25 years 90 days (completed)-65 years 85 years 7 to 10 times the annual premium
LIC New Jeevan Anand Endowment Plan 15 years-35 years 18 years – 50 years 75 years Min- Rs.1,00,000 Max- No Upper limit
LIC Bima Ratna Money Back Policy 15, 20, or 25 years 90 days – 55 years 70 years Min-Rs.5,00,000 Maximum- No Upper limit
LIC Jeevan Umang Whole Life Insurance 100 years minus the age at entry 90 days – 55 years 100 years Min- Rs. 2,00,000 Max- No Upper Limit

Factors Influencing Surrender Value

One must be aware of the various factors that might impact the surrender value of an LIC policy beforehand. To make it more easy for you we will now enlighten you with the main factors that influence the surrender value of an LIC policy:

  • Type of Policy: As we mentioned, surrender value depends majorly on the type of policy. Some like term insurance plans have no surrender values, while some like whole life insurance or endowment plans have surrender values. 
  • Duration of the Policy: The LIC surrender value is largely impacted by the actual policy duration. Remember that the surrender value tends to increase as the policy matures and if you surrender the policy in the early years, it will drop significantly.
  • Premium Paid: Another factor that impacts the surrender value on an LIC policy is the total amount of premium paid. Generally, policies with higher premiums tend to reap higher surrender values. 
  • Conditions of the Policy: At the same time, sometimes certain terms and conditions applied to a policy may impact the surrender value of the policy. Such as the waiting period and if the policyholder surrenders the policy before a certain duration then the surrender value may be low.
  • Current Market Conditions (ULIPs): The surrender value may be greatly impacted by the current market conditions, especially in the case of Unit Linked Insurance Plans or ULIPs. The surrender value will be higher in case of favourable market conditions and vice versa. 
  • Benefits and Riders on the Policy: Last but not least, the additional riders and benefits on the policy also greatly impact the surrender value of the plan. Some riders may enhance the surrender value, while some might leave no impact. 

To Conclude

As mentioned above, surrendering your LIC policy is possible if you are not happy with the terms and conditions of the policy. You can visit the official website of LIC to verify policy surrender status online. However, you need to wait for a period of three years after buying the policy to surrender it, else you will not get any surrender value. So, you have to hold on to the policy for at least three years before you could surrender it.

However, it is highly recommended not to surrender LIC policy. Instead you can make it a paid-up policy, which provides death benefit on maturity while surrendering.

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FAQs: LIC Surrender Value Check - Process to Calculate Surrender Value of LIC Policy

Does surrender value include the vested bonuses?

Yes, if the policy has earned bonuses before it is surrendered, the surrender value of bonuses would also be added to the surrender value of the policy under special surrender value.

How is the surrender value of a single premium policy calculated?

The surrender value of a single premium policy is calculated as a percentage of the single premium paid.

When can a unit-linked plan be surrendered?

A unit-linked plan can be surrendered only after the completion of the first five years of policy initiation. Even if the policy is surrendered before, the surrender value would be paid only when the first five years come to an end.

How long does a policyholder have to wait to surrender LIC policy?

A policyholder has to wait for three complete years before he/she could surrender the plan and receive the surrender value that is payable. In case of participating policy the Bonus get attached to it as per prevalent rules. However, Surrendering a policy is not recommended since the surrender value would always be proportionately low in terms of the premium paid under the plan.

Is the LIC surrender amount taxable?

The amount received by surrendering a plan including the bonus or interest is taxable in the year in which the amount was paid to the policyholder.

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Dec 28, 2022
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