Surrender value is the amount you get if you surrender or stop paying premiums for a policy. It is not advisable because you only get a percentage of the total premiums paid and therefore, you stand to lose money. The LIC surrender value after 10 years of premium payment can be calculated based on the pending premium payments, attached bonuses, and the surrender value factor.Read more
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If you are in urgent need of money, LIC policy surrender may seem ideal. While there is no such tool as LIC surrender value after 10 years calculator, the same can be calculated using the following guide to surrendering LIC policy before maturity.
If you want to calculate how much money you can encash from your policy after surrendering it, you should know certain important aspects of LIC’s surrender value benefit.
To surrender an LIC policy after 10 years, you should have paid premiums for a minimum of 3 years. Only then can you claim any surrender benefit.
The more premiums you have paid, the more money you are likely to get back.
Bonuses also acquire a surrender value.
LIC declares surrender value factors as per the policy term and the policy year in which you are surrendering it.
Surrender value factors are separate for premiums paid and bonuses accrued.
Surrender value does not include the 1 year’s premium, premiums paid for riders and taxes.
If you have continued your policy for 10 years, surrendering it will entitle you to a Guaranteed Surrender Value or Special Surrender Value. LIC calculates the both and pays whichever amount is higher at the time of surrender.
The amount depends on the premiums paid, premiums due, surrender value factor, and accrued bonuses.
Here’s how you can check the surrender value of LIC policies.
Surrender value calculation is very simple.
Guaranteed Surrender Value is equal to - (total premium paid multiplied by the guaranteed surrender value factor) plus (bonus multiplied by surrender value factor for bonus).
Special Surrender Value is equal to - (Original sum assured multiplied by (number of premiums paid / number of premium payable) + total bonus received) * surrender value factor
You will find all the above information in the brochure or the policy document. All you have to do is place the numbers in these formulae.
Let us assume that you bought LIC’s New Jeevan Anand policy. Here are your requirements -
Policy term - 20 years
Sum assured - Rs. 10,00,000
Using the LIC Premium & Maturity Calculator, annual premium - Rs. 54,869
Bonus Rate - Rs. 50 per Rs. 1000 of sum assured
Now you decide to surrender the policy in the 11th year. Therefore -
Total premiums paid is equal to Rs. 5,48,690.
Total bonus accrued = ((50 x 10,00,000/1,000) x 10) which equals Rs. 5,00,000.
The guaranteed surrender value factor for a policy term of 20 years and policy surrender in the 11th year is 60% (as mentioned in LIC New Jeevan Anand’s brochure).
The guaranteed surrender value factor for bonuses is 18.6%.
Putting the above data in the formula for calculating the LIC guaranteed Surrender Value after 10 Years, we get (5,48,690 multiplied by 60%) plus (5,00,000 multiplied by 18.6%) which is equal to Rs. 4,22,214.
This is the LIC surrender value you will receive if you surrender your policy after 10 years.
While this LIC surrender value after 10 years calculator shows an overall estimate of the amount you will receive, you should know that there are several charges that are excluded by LIC. Also remember that the bonus rate is never constant. So you should check with LIC’s customer support to keep updated.