LIC surrender Value Calculator

The surrender value calculator acts as an important tool for the people living abroad as it is easy and feasible to receive their estimated digits over a web page which saves time and provides time for you to make informed decisions.

What Is the LIC Surrender Value Calculator?

The LIC surrender value calculator is a very easy online tool that helps the policyholders to receive estimated digits in case they wish to surrender their policy before its maturity deadline. The calculator asks for some basic details like which LIC policy plan did you have, sum assured, polity term in years, annual premium, years for which you have paid the premium, bonus pile up and the frequency of premium paid. Now the calculator provides you with details of the amount that you are entitled to receive if you surrender the policy.

The LIC surrender value calculator simplifies the calculations and eliminates the need for manual effort upon surrender of policies like life insurance. It helps policyholders better understand their options, making it easier to decide whether to keep their policy or surrender it.

When can you surrender the policy?

LIC Policy can be surrendered after completing one full year with regular premium payments as per your frequency. But GSV is payable after two years of completion with premium payment and SSV on one year of full premium payments. Higher of both digits shall be paid to the policyowner.

Typically, if you surrender the LIC policy before 2 years then no surrender value is payable and you have paid 2 full years of premiums. If you are exploring surrender rules for LIC plans for NRIs, it is important to check the specific policy terms, as surrender benefits may vary across plans.

Benefits of Using an LIC Surrender Value Calculator

Faster calculations: Entering your basic data and clicking “calculate” is all that is required from the user. LIC’s surrender value calculator allows easier and faster estimations.

Transparency in results: The results displayed are true to the given formulas by LIC and can be trusted by the policyholder. So the amount that you may possibly receive is very close to the estimations by the LIC calculator and it helps you to know your policy’s worth.

User-friendly: The calculator is simple and can be learnt to use by people of all ages as it is very straight forward.

Informed decision making: The estimation provides the user with a clear breakdown of GSV, potential bonuses and SSV which helps you understand the need to do it now or you can wait further for better returns. The returns increase with time so if you basically, the early you surrender, the less payout you receive.

How to Calculate Surrender Value of LIC Policy?

You can use the below mentioned formula to calculate LIC surrender value manually:

Surrender Value = ( Total Years Premiums Paid / Total Policy Term in Years × Total Maturity Value / Sum Assured + Accrued Bonus) × Surrender Value Factor (SVF)

Let's say:

Yearly premium: Rs. 20,000

Years completed: 6 years

Sum assured: Rs 5 Lakhs

Accrued bonus: Rs 1 Lakh

GSV factor: 50%

GSV = (20,000 x 6 - 20,000) x 30% = (1,20,000 - 20,000) x 50% = Rs. 50,000

SSV could be higher, depending on LIC’s valuation in that financial year. The calculator shows the higher value as your surrender amount.

Sample Illustration of LIC Surrender Value Calculation

Let’s calculate a sample surrender value for better understanding. Imagine the figures to be as per the LIC Jeevan Labh 736 policy: at the age of 30 , you purchased a policy with a sum assured of Rs 2 lakhs for a term of 25 years at an annual premium of Rs 10025.

Here is the amount that you will receive if you surrender the policy depending upon different years of it being enforced with two different rates of assumed future investment returns of 4% p.a. :

Types of LIC Surrender Values Calculator

Majorly there are two types of values that are considered when you exit a policy before maturity:

Guaranteed Surrender Value (GSV) : `This value refers to the minimum payout that must be paid to you as per the IRDAI guidelines. It is calculated using the fixed percentages that are applied to the amount of premiums paid until the surrender. Usually it is lower and does not include any bonuses.

Special Surrender Value (SSV): This value is statistically higher and beneficial for the policyholder as the payout is calculated on the paid-up value along with the bonuses(applied as per the current financial year). It accounts to a significant bonus in the long term.

What is the Surrender Value Factor (SVF)?

The surrender value factor as per LIC is basically an already decided percentage for every policy year to later calculate the payout during surrender as per your premium amount paid. It depends on your policy term and policy year. For the first year it is typically zero and keeps on increasing gradually with time.

By using an online LIC surrender value calculator or a similar tool, it is implied that the surrender value factor has been integrated into the calculation. This gives policyholders a more precise estimate of their surrender benefits, eliminating the need for manual calculations.

How to Surrender your LIC Policy?

In order to surrender your LIC policy, you should carry the original documents used at the time of policy purchase to your specified LIC branch where the advisor will help you digitalise your application via their online portal.

Here’s how to surrender LIC policy in simple steps:

Step 1: Go to your nearest branch with all your necessary documents, where the advisor will provide you with The Surrender Discharge Voucher

Step 2: Fill out the Form with all the mandatory details and a reason for surrender.

Step 3: Organise and prepare your original documents, policy document with additional photocopies if required

Step 4: The advisor will digitalise your application via their online portal and upload the documents and will let you know of the final estimated surrender value and its further details.

Documents Required to Surrender LIC policy?

Bring along all the below mentioned documents and make sure of their validity:

• Surrender request form

• Original policy bond

• Cancelled cheque or bank details

• Valid ID proof (PAN, Aadhaar)

Summing Up

LIC surrender value calculator is an easy web tool that helps the user to estimate the payout that he/she may receive if they surrender the LIC policy before its maturity. These estimates promote clear and informed future financial decisions in the event of surrender. For people sitting across the world, it becomes difficult to make such decisions without proper calculations, hence LIC surrender value calculator helps them to ease their uncertainty and make a smart choice.

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