What will be the surrender value of LIC policy after 5 years?

Asked by: Dawn Padberg  |  Last update: February 11, 2022
Score: 4.3/5 (22 votes)

A 100% special surrender value is given out if the policyholder has regularly paid the premiums for five years.

Can I surrender LIC policy after 5 years?

If 5 years have passed after you purchased your LIC policy, you are eligible for policy withdrawal. However, keep in mind that currently, the facility of surrendering LIC policy is not available online. So, it would be best if you surrendered the LIC policy through the service branch of LIC.

What happens if I stop paying LIC premium after 5 years?

Term: If you stop paying premiums, your coverage lapses. Permanent: If you have this type of policy, you will have the following choices: Cash out the policy. ... You may, however, have to pay taxes on some of the cash value if the sum exceeds what you have paid in premiums.

How is surrender value of LIC calculated?

How Is LIC Surrender Value Calculated? The surrender value of the policy, only after 3 successful years of premium payments, can be calculated as: {Basic sum assured X (number of premium paid/ total number of premium payable) plus total bonus received}, X, the factor of surrender value.

Is it good to surrender LIC policy?

Surrender value is payable only after three full years premiums are paid to LIC. More over if it is a participating policy the Bonus get attached to it as per prevalent rules. Surrender of policy is not recommended since the surrender value would always be proportionately low.

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17 related questions found

When can we surrender LIC policy?

The policy can be surrendered after it has been in force for at least 3 full years. The Guaranteed Surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.

Can we surrender LIC policy online?

First keep in mind that as of now Surrendering LIC policy is not possible ONLINE. Also, you have to surrender the LIC policy at your servicing LIC branch ONLY. ... The reason for this is, your all policy documents like proposal forms, loan details and all other details will be available at servicing branch only.

What is surrender benefit?

Definition: It is the amount the policyholder will get from the life insurance company if he decides to exit the policy before maturity. ... Once you decide to exit the insurance policy, all the benefits associated with it, including the protection cover, will cease to exist.

How can I surrender my LIC policy after 6 years?

So if you have traditional life insurance policy and want to discontinue it, there are two broad options: First, convert it into a paid-up policy without exiting, and second, surrender and ask the insurer for the surrender amount by completely exiting the policy.

How can I surrender LIC policy after maturity?

Mandatory Documents for Policy Surrender:
  1. Policy bond - the original copy.
  2. Printout of LIC policy surrender form No. ...
  3. A cancelled cheque from the policyholder's bank.
  4. Policyholder will be required to utilise the LIC NEFT form, if above-mentioned form No. ...
  5. Proof of identification like Aadhaar card needs to be carried along.

How can I withdraw my LIC policy after maturity?

Documents Required for Maturity Claim Discharge
  1. Original LIC Policy Document.
  2. Identity Proof.
  3. Age Proof (if not submitted previously)
  4. Cancelled Cheque leaf or a copy of the Policy holder's Bank Passbook.
  5. NEFT Mandate Form (to transfer the maturity proceeds directly to the policyholder's account)

How do you avoid surrender charges?

However, there are several ways to avoid or minimize these costs.
  1. Wait it out. ...
  2. Withdraw your funds incrementally over a period of years. ...
  3. Purchase a "no-surrender" or "level-load" annuity. ...
  4. Re-allocate your investment capital. ...
  5. Exchange your annuity for another one under Section 1035 of the tax code.

What is special surrender value in LIC?

Special surrender value = (Original sum assured * (No. of premiums paid/No. of premiums payable) + total bonus received) * surrender value factor. When one stops paying premiums after a certain period, the policy continues but with lower sum assured. This sum assured is called the paid up value.

What is minimum guaranteed surrender value?

Most insurers offer two options: a minimum guaranteed surrender value, which is a regulatory requirement, and a non-guaranteed surrender value. The guaranteed surrender value is a fixed percentage of your premiums—typically, it is around 30-35% of all the premiums paid minus the first year's premium.

How can I check my LIC policy surrender status?

How To Check LIC Policy Surrender Status Online?
  1. Visit the official website of LIC.
  2. Register as a new user and if you are already registered then click 'login here'
  3. Login to the LIC portal and select 'Enrol Policies' displayed on the left side of the page.
  4. Click on 'Click to Enrol New Policies' and hit on 'Proceed'

Is LIC surrender amount taxable?

The surrender value that you may receive will not be tax-free under Section 10 (10D), and the amount will be treated as 'income from other sources' and taxed as per the existing tax bracket.

Can I surrender LIC policy in any branch?

The LIC policy can only be surrendered at the branch, where it's currently being served (i.e. Servicing Branch). So you need to change the policy servicing branch first, before surrendering it. This will add time for the surrender process.

What happens if I stop paying LIC premium after 1 year?

For single premium policies, the surrender value gets acquired after the first year itself. In case you haven't paid even 2 or 3 years' premium (as per the case above) and want to discontinue, the insurer will not pay you back anything and will not convert it into a paid-up policy either. The money is all but lost.

What is surrender value factor?

The surrender value factor is the percentage of total premiums paid. Surrender value factor increases with the number of years of the policy. Surrender value factor will get close to 100% of premiums paid when the policy nears maturity.

How can I check my LIC maturity amount?

Maturity Amount of LIC Plans

The maturity amount is calculated by adding the sum assured, which is decided upon by the customer and the company at the time of purchasing the plan, the bonus amounts or profits received throughout the plan's tenure, and additional bonuses if mentioned by the Corporation.

What is surrender charge period?

A "surrender charge" is a type of sales charge you must pay if you sell or withdraw money from a variable annuity during the "surrender period" – a set period of time that typically lasts six to eight years after you purchase the annuity. Surrender charges will reduce the value and the return of your investment.

What is surrender penalty?

A surrender fee is a penalty charged to an investor for withdrawing funds from an insurance or annuity contract early or canceling the contract. Surrender fees act as an incentive for investors to maintain their contracts and reduce the frequency of early withdrawals.

What is cash surrender charge?

A surrender charge is a fee incurred when you sell, cash in, or cancel certain types of investments, insurance policies, or annuities. It can be imposed during a pre-set number of years known as a surrender period. ... Learn what types of investments have surrender charges and how to avoid them.

Do I get money back if I cancel my life insurance?

Do I get my money back if I cancel my life insurance policy? You don't get money back after canceling term life insurance unless you cancel during the free look period or mid-billing cycle. You may receive some money from your cash value if you cancel a whole life policy, but any gains are taxed as income.