LIC Jeevan Labh 836 Surrender Value Calculator

Buying life insurance is a long-term investment. On certain occasions, you might find yourself struggling to pay the premiums associated with your plan. Especially when financial hardships hit, you will most likely want to liquidate certain parts of your investments. With insurance products, you have the option to surrender your policy while also earning some of the benefits that come with the plan.

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Let’s look at the surrender value specifically for LIC Jeevan Labh 836.  

Surrender Value of LIC Jeevan Labh 836

First of all, let’s briefly understand what surrender value exactly is.

Surrender value is the amount that you are entitled to, should you choose to discontinue your current insurance policy. If you have reservations against your current plan and wish to terminate it without foregoing some of the benefits associated with it, you can surrender your policy. LIC Jeevan Labh 836 acquires surrender value on the completion of three policy years.

Notably, LIC Jeevan Labh 836 is a participating, with-profits policy. This implies that policyholders of this plan also receive bonuses along with the surrender value amount on surrendering the policy.

There are certain important factors that you should be mindful of when surrendering your active policy. 

  • Premiums - With LIC, surrender value is only payable to you if three full years’ premiums have been paid to the insurer. 

  • Riders - Riders do not acquire any surrender value, therefore, none shall be payable if you have riders attached to your base policy. 

  • Bonuses - The surrender value associated with simple reversionary bonuses is also payable to the policyholder.

  • Surrender Value Factor - The surrender value factor which determines the final amount depends on the policy term and the policy year during which it was surrendered. 

Types of Surrender Value with LIC Jeevan Labh 836

Policyholders are entitled to get two types of surrender values if they surrender their policy before maturity.

Guaranteed Surrender Value - The guaranteed surrender value is calculated as - the total premium amount paid till policy surrender multiplied by the guaranteed surrender value factor (as applicable for total premiums paid). The guaranteed surrender value factors for total premiums paid under LIC Jeevan Labh 836 are defined below.

Policy Year Policy Term
16 years 21 years 25 years
1 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00%
3 30.00% 30.00% 30.00%
4 50.00% 50.00% 50.00%
5 50.00% 50.00% 50.00%
6 50.00% 50.00% 50.00%
7 50.00% 50.00% 50.00%
8 53.75% 52.30% 51.80%
9 57.50% 54.60% 53.50%
10 61.25% 56.90% 55.30%
11 65.00% 59.20 57.10%
12 68.75% 61.50% 58.80%
13 72.50% 63.80% 60.60%
14 76.25% 66.20% 62.40%
15 80.00% 68.50% 64.10%
16 80.00% 70.80% 65.90%
17 73.10%  67.60%
18 75.40%  69.40%
19 77.70%  71.20%
20 80.00%  72.90%
21 80.00%  74.70%
22 76.50%
23 78.20%
24 80.00%
25 80.00%

Special Surrender Value - The special surrender value is calculated as - special surrender value factor multiplied by the sum of paid-up sum assured and vested bonuses. The special surrender value factor is declared by LIC periodically and can be assessed only at the time of surrender. 

In addition to the above two types, bonuses also acquire a surrender value. The surrender value concerning simple reversionary bonuses is calculated as - vested bonuses multiplied by the surrender value factor (as applicable under vested bonuses). 

The guaranteed surrender value factors for bonuses under LIC Jeevan Labh 836 are as follows:

Policy Year Policy Term
16 years 21 years 25 years
1 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00%
3 17.58%  15.93%  15.28%
4 17.66%  16.22%  15.42%
5 17.85%  16.58%  15.55%
6 18.16%  17.03%  15.72%
7 18.60%  17.58%  15.93%
8 19.18%  17.58%  16.22%
9 19.93%  17.66%  16.58%
10 20.85%  17.85%  17.03%
11 21.99%  18.16%  17.58%
12 23.38%  18.60%  17.58%
13 25.05%  19.18%  17.66%
14 27.06%  19.93%  17.85%
15 30.00%  20.85%  18.16%
16 35.00%  21.99%  18.60%
17 23.38%  19.18%
18 25.05%  19.93%
19 27.06%  20.85%
20 30.00%  21.99%
21 35.00%  23.38%
22 25.05%
23 27.06%
24 30.00%
25 35.00%

Illustrations To Understand LIC Jeevan Labh 836 Surrender Value Calculation

To bring more clarity to this concept, let's look at a sample profile and calculate the surrender value for the same. For this illustration, we are considering Ray who bought LIC's Jeevan Labh policy for a cover of Rs.10 Lakhs for a policy term of 21 years. His annual premium came out to be approximately Rs.48,000.

Let’s assume the bonus rate to be Rs.50 per thousand sum assured. Please note that all the factors have been assumed for a sample profile and should not be construed as definitive.

Now, Ray has paid all due premiums for 6 years, following which he decides to surrender the policy. The guaranteed surrender value that he is entitled to at this point will be calculated in the following manner. 

  • Total Premium Paid is (6 x 48,000) which equals Rs.2,88,000. 

  • The surrender value Factor for total premiums paid for 6 policy years is 50% (as in Table 1).

Therefore, the surrender value of premiums comes out to be (Rs.2,88,000 x 50%) which equals Rs.1,44,000.

  • The bonus amount receivable for 6 years at the above mentioned rate is ((50 x 10,00,000/1,000) x 6) which equals Rs.3,00,000. 

  • The surrender value Factor for bonuses received for 6 policy years is 17.03% (as in Table 2).

Therefore, the surrender value of bonuses comes out to be (Rs.3,00,000 x 17.03%) which equals Rs.51,090. 

Finally, Ray receives the sum of Rs.1,44,000 and Rs.51,090, which comes to Rs.1,95,000. This final amount is the guaranteed surrender value payable by LIC to Ray. 

Summing Up

Buying an insurance policy has a multitude of benefits. Apart from the traditional death and maturity benefits, the surrender value feature helps you en-cash a significant amount of the cover that you can use to fund urgent financial needs. While it is always advisable to continue through with the entire duration of the policy, for some people surrendering a policy can prove to be the saving grace in case of an emergency. 

Life throws several curve balls at us and leaves us completely unprepared to tackle most of them. Therefore, we cannot stress enough the importance of establishing a strong financial net for yourself and your family.

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