Surrender Value: It is the amount payable to the policyholder by the Life Insurance Corporation of India (LIC). It is paid when anyone of the policy holders wants to exit the policy before maturity period. LIC Policy Surrender Value is payable to the policyholder only after three full years premiums are paid to the insurance company.
When the policyholder does a midterm surrender, then he will get a sum of what has been allocated towards the savings and earnings on them. And they will deduct the surrender charge from this amount, and it varies from policy to policy. If the policyholder terminates the cover after five years, then as per the recent IRDAI directive. Life Insurance Companies can’t impose any surrender charges on him. Then the policyholder will get the fund value of his investment only.
Types of LIC Surrender Value Policy
Guaranteed Surrendered Value:
If your policy is eligible for this LIC surrender policy, then they should mention in the policy bond. And it should be payable after the completion of 3 years. Guaranteed Surrendered Value is usually equal to 30% of the total amount of premiums excluding the premiums for the first year. It also excludes any additional premium paid for riders, taxes and any bonus that you may have received from the LIC.
However, the percentage of this Guaranteed Surrendered Value will depend on the Policy Term and the Policy Year in which the policy abandoned. Along with this, the surrender value of Vested Bonuses shall also be payable. It is equal to the vested bonuses multiplied by the LIC Surrender Value. The percentage applicable to vested bonuses will be from 16% to 35% based on the policy year.
Special Surrender Value:
Special Surrender Value will be equal to 80% of the Maturity Sum Assured. It is nothing but three or more years but less than four years premiums have been paid. Then the Maturity Sum Assured for this will be the Maturity Sum Assured corresponding to the term for which the premiums have been paid under the policy.
SSV is usually higher than the Guaranteed Surrender Value, but it is at the discretion of the insurer. The amount will depend on the duration for which premiums have been paid and the policy duration at the date of surrender. To get detailed information on the LIC Surrender Policy that you want to know, you may contact any LIC agent.
How To Submit LIC Policy Surrender Value
Documents Required for Surrender Policy
- Carry the Original Policy Certificate.
- Photocopy of the premium payment receipts.
- Photocopy of latest Unit Balance.
- Download the LIC Surrender Policy Application Form.
- Fill the required details and affix the revenue stamp.
Steps to Submit LIC Surrender Policy
Step 1: You can only surrender your policy in the office where the policy is issued.
Step 2: You can find your policy issuing office in policy certificate or premium receipts.
In Step 3: Then carry your original policy documents and other proofs.
Step 4: Visit your LIC branch and submit the application form. Only the policyholder can submit the form.
Step 5: Then provide a canceled bank cheque to the office.
In Step 6: Now, fill up the LIC’s Neft form to get the amount in your bank account automatically.
Step 7: After verification of your policy details the LIC officer will issue you an acknowledgment receipt. Take the receipt slip for your surrendered policies.
Step 8: Then ask for LIC policy surrender processing time after successful form submission.
However, once you have surrendered, it would take approximately 20-30 days for you to receive the check at your address. Then they will send your check to the address on your policy. If the address is not your current address, you may get it updated by giving address change request form. They will modify the address immediately and will make you an acknowledgment.