If you have also bought LIC policy or you want to surrender your policy, then this news is of your use. Actually, many people buy insurance without knowing the benefits and features of Life Insurance Corporation of India ie LIC. But much later it comes to know that LIC policy is of no use to them and then they want to end LIC in the middle. The only solution is to surrender such LIC policy. So let’s know what are the rules related to it.
How can you surrender?
LIC is the largest and government insurance company in the country. LIC also provides the facility to surrender the policy to its customers. If the policyholder does not get all the benefits associated with the insurance plan, then he can surrender the life insurance policy. This could be because he is not able to meet the commitment period of the policy and is not able to pay the fixed premium charged by the insurance company to avail the benefits of the plan. To avail the benefits on surrender of the policy, the policyholder has to go through the surrender process as decided by the insurance company and pay the surrender charges. This may differ from insurer to insurer. So if you surrender a policy in the medium term, you will get the surrender value i.e. a sum of the amount allocated for saving and earning. Apart from this, a surrender charge is also deducted from this amount, which varies from policy to policy. If you surrender before maturity, its value gets reduced. No value is given in case of surrender before 3 years. For this premium has to be paid for 3 years.
understand surrender value
Surrender value is the amount that a policyholder takes from the life insurer when he decides to discontinue a policy before its maturity period. Suppose the policyholder decides to surrender mid-term, in which case the amount allocated for earning and saving will be given to him/her. From this, surrender charge is deducted depending on the policy. There are two types of surrender value. Guaranteed Surrender Value and Special Surrender Value, first of all, the Guaranteed Surrender Value is given to the policyholder only after the completion of three years. This value makes up only 30% of the premium paid for the plan. Further, it does not include premiums paid for the first year, additional costs paid for riders and bonuses. Now, if we talk about the special surrender value, to understand it, it is necessary to first know what is the paid-up value. Suppose the policyholder stops paying premiums after a specific period, then the policy will continue, but at a lower sum assured called paid-up value. The paid-up value is calculated by multiplying the Basic Sum Assured by the quotient of the number of premiums paid and the number of premiums payable. On discontinuing the policy, you get a special surrender value, which is calculated as the sum of the paid-up value and the total bonus multiplied by the surrender value factor.