LIC Policy Surrender Value Calculator

When life situations change, sometimes Policyholders feel the need to discontinue their LIC policy before it matures. But the important question is, what will be the amount returned if the policy is surrendered? This is where the LIC Policy Surrender Value Calculator becomes a helpful tool. This article explains everything in simple language about surrender value, how to calculate it, and how the LIC surrender value calculator works.

What is LIC Policy Surrender Value?

When an LIC policyholder decides to cancel or exit their policy before maturity, LIC does not return the full premiums paid but pays a certain amount called the Surrender Value. This is a portion of the total premiums paid, adjusted for policy tenure, bonuses, and other factors.

The surrender value helps policyholders get some money back in case they need to discontinue the policy for any reason. It acts as a refund but less than the total premiums paid.

Why is Surrender Value Important?

• It motivates policyholders to continue the policy, knowing some money will come back in hardships.
• Helps in financial planning during emergencies when a policy is no longer affordable.
• It is a key benefit for those who cannot hold the policy till maturity.
• Understanding surrender value prevents surprises if one decides to exit early.

Types of LIC Surrender Value

There are two main types of surrender values that LIC calculates:

1. Guaranteed Surrender Value (GSV)

• This is the minimum amount LIC guarantees to pay.
• It is usually calculated as a percentage of total premiums paid, excluding the first year’s premium.
• The GSV percentage increases as the number of years premiums are paid increases.
• This value does not consider bonuses or bonuses accumulated in the policy.

2. Special Surrender Value (SSV)

• SSV is usually higher than GSV.
• It includes the paid-up value (related to sum assured and premiums paid), accumulated bonuses, and a surrender value factor.
• LIC pays the higher of the two values (GSV or SSV) when a policy is surrendered.
• SSV varies by policy terms, duration, and the bonuses declared.

How Does LIC Calculate Surrender Value?

The surrender value depends mainly on these factors:

• Total premiums paid (excluding the first year)
• Number of years premiums are paid
• Bonuses (if any) accrued on the policy
• Surrender value factors defined by LIC

General Formula for Surrender Value

Surrender Value=(Total Premiums Paid – First Year Premium) × Surrender Value Factor + Bonus Surrender Value

For Special Surrender Value, the formula is SSV=(Paid-up Value+Bonus)×SSV Factor

Where:

• Paid-up value = Sum Assured×Number of Premiums Paid Total Number of Premiums Payable Total Number of Premiums Payable Sum Assured×Number of Premiums Paid
• Bonus is the accrued reversionary bonuses declared by LIC.
• SSV Factor varies by policy and duration.

When is Surrender Value Payable?

• Surrender value is usually payable only if the policyholder has paid premiums continuously for at least 3 full years.
• If surrendered before 3 years, usually, no surrender value is paid.
• After 3 years, surrender value gradually increases with each additional year premium paid.

Using LIC Policy Surrender Value Calculator

The LIC Policy Surrender Value Calculator is an online tool that simplifies this complex calculation. It estimates how much you can get if you decide to surrender your policy before maturity.

How to Use the Calculator

1. Enter Policy Details:
   • Select the LIC Plan name (e.g., Jeevan Anand, New Endowment Plan).
   • Input Sum Assured, Policy Term.
   • Choose Premium Payment Frequency (yearly, half-yearly, etc.).
2. Fill in Premium Information:
   • Enter Annual Premium amount.
   • Enter the number of years premiums have been paid.
3. Calculate:
   • Click the calculate button.
   • The surrender value is displayed instantly.

Sample Calculation for Understanding

Let’s take an example to see how surrender value is calculated:

GSV Calculation=₹30,000×5×50%=₹75,000

Bonus Value=₹50,000×15%=₹7,500

Estimated Surrender Value=₹75,000+₹7,500=₹82,500

Benefits of Using the LIC Policy Surrender Value Calculator

• Quick Estimation: Calculate approximate surrender value in seconds.
• Accurate: Based on latest LIC surrender value factors and policy terms.
• Helpful for Planning: Helps policyholders make informed decisions.
• Free and Easy: Available online without any cost.

Important Points to Remember About Surrender Value

• Surrendering should be a last resort; it halts your insurance coverage.
• You get less than the total premiums paid; it is not a full refund.
• Bonuses add to the surrender value, but only from participating policies.
• Policies like ULIPs have different surrender rules.
• Always consult LIC or use a calculator for exact figures.

How to Surrender Your LIC Policy

If deciding to surrender the policy:

1. Visit the LIC branch where the policy was purchased or nearest branch.
2. Submit the surrender form (Surrender Discharge Voucher).
3. Provide original policy documents, ID proof (Aadhar, PAN), and bank details.
4. LIC processes the surrender and pays the value in 7-10 working days.
5. You can also download the surrender form from LIC official website before visiting.

What Affects LIC Surrender Value?

Several factors impact surrender value including:

• Policy type: Endowment, Whole Life, Money Back policies differ.
• Policy tenure: Longer policy duration often has higher surrender value.
• Number of premiums paid: more the premiums paid, the better the surrender amount.
• Accrued bonuses: Participating plans accumulate bonuses affecting surrender value.
• Surrender value factor: Increases with policy years.

Difference Between Surrender Value and Paid-Up Value

• Surrender Value: The amount received on cancellation of policy before maturity.
• Paid-Up Value: The reduced sum assured when you stop paying premiums but keep the policy until maturity.

FAQs on LIC Policy Surrender Value Calculator

Conclusion

The LIC Policy Surrender Value Calculator is an essential tool for LIC policyholders who need to understand how much they will receive if they surrender the policy before maturity. It helps estimate the payable amount based on various parameters such as premiums paid, policy term, bonuses, and surrender value factors.

Always remember that surrendering should be considered carefully, as it ends your policy coverage. Utilizing the surrender value calculator provides clear insights and aids in making a financially sound decision.