Lic India Surrender Value Calculator

LIC Policy Surrender Value Calculator

Use this calculator to estimate the surrender value of your LIC life insurance policy. Please note that the actual surrender value can vary based on your specific policy terms, LIC's current rules, and declared bonuses. This calculator provides an estimate based on the factors you input.

Surrender Value Factors (Refer to your policy document or LIC for exact values)

These percentages are crucial for an accurate estimate. If unsure, use common approximations or consult LIC. Note: Guaranteed Surrender Value Factor for Premiums often excludes the first year's premium. Adjust your input factor if your policy specifies this.

Understanding LIC Policy Surrender Value

When you purchase a life insurance policy from LIC (Life Insurance Corporation of India), you commit to paying premiums for a specified term. However, circumstances can change, and you might consider surrendering your policy before its maturity. Surrendering a policy means terminating it prematurely in exchange for a lump sum payment from LIC, known as the Surrender Value.

What is Surrender Value?

The Surrender Value is the amount of money LIC pays to the policyholder if they decide to terminate their policy before the end of its term. It's essentially a portion of the premiums paid back to you, along with any accrued bonuses, after deducting certain charges. It's important to understand that the surrender value is typically less than the total premiums you've paid, especially in the initial years.

Why Do People Surrender Policies?

• Financial Hardship: Inability to continue paying premiums due to unforeseen financial difficulties.
• Better Investment Opportunities: Finding other investment avenues that promise higher returns.
• No Longer Needing Coverage: Changes in life circumstances where the original insurance need no longer exists.
• Lack of Understanding: Realizing the policy doesn't meet their financial goals as initially thought.

Key Components of Surrender Value Calculation

LIC policies generally calculate surrender value based on two main components:

1. Guaranteed Surrender Value (GSV)

The Guaranteed Surrender Value is the minimum amount LIC is legally obligated to pay upon surrender. It typically becomes payable only after a certain number of premiums have been paid (usually 2 or 3 full years, depending on the policy). The GSV is calculated as:

• A percentage of the total premiums paid (often excluding the first year's premium and extra premiums, if any). This percentage increases with the number of years the policy has been in force.
• Plus, a percentage of the vested (accrued) bonuses. For policies surrendered after a significant period, this percentage can be 100%.

The exact percentages for GSV are specified in your policy document and vary by policy type and duration.

2. Special Surrender Value (SSV)

The Special Surrender Value is often higher than the GSV and is declared by LIC from time to time. It is not guaranteed and depends on the corporation's financial performance and prevailing market conditions. The SSV is generally calculated as:

• A percentage of the "Paid-up Sum Assured" plus the total accrued bonuses.
• The "Paid-up Sum Assured" is the original Sum Assured multiplied by the ratio of the number of premiums paid to the total number of premiums payable.

LIC usually pays the higher of the Guaranteed Surrender Value and the Special Surrender Value.

Factors Affecting Your Surrender Value

• Policy Type: Endowment, Money Back, Whole Life policies have different surrender value structures.
• Policy Term: Longer terms might have different surrender value accrual patterns.
• Years Policy in Force: The longer you've held the policy and paid premiums, the higher the surrender value generally becomes. Surrendering in the early years results in significant losses.
• Premiums Paid: The total amount of premiums paid directly influences the GSV.
• Accrued Bonuses: For participating policies, declared bonuses add to the surrender value.
• LIC's Current Rules: The Special Surrender Value factor can change based on LIC's discretion.

Important Considerations Before Surrendering

Surrendering a life insurance policy should be a last resort, as it often results in financial loss. Before you decide, consider these alternatives:

• Policy Loan: You might be able to take a loan against your policy's surrender value, allowing you to meet short-term financial needs without terminating the policy.
• Making the Policy Paid-up: If you stop paying premiums after a certain period (usually 2-3 years), your policy can become "paid-up." This means the coverage continues for a reduced sum assured, and you don't have to pay further premiums.
• Revival: If your policy has lapsed due to non-payment, you might be able to revive it within a specified period by paying arrears with interest.
• Consult a Financial Advisor: Seek professional advice to understand the implications and explore all available options.

Disclaimer:

This calculator provides an estimated surrender value based on the inputs you provide and simplified formulas. The actual surrender value can only be confirmed by LIC. Always refer to your specific policy document and contact LIC directly for precise figures and advice.

Note:

Detailed Breakdown:

Total Guaranteed Surrender Value (GSV): ₹ " + totalGSV.toLocaleString('en-IN') + "

Total Special Surrender Value (SSV): ₹ " + totalSSV.toLocaleString('en-IN') + "

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Estimated Surrender Value: ₹ " + finalSurrenderValue.toLocaleString('en-IN') + "

(This is the higher of GSV and SSV)