The LIC Surrender Value Calculator estimates the amount payable if you surrender your LIC policy before its maturity. It calculates the surrender value based on factors like total premiums paid (excluding the first year’s premium), accrued bonuses, policy term, and the surrender value factor set by LIC.
What is the LIC surrender value calculator?
When an LIC policyholder decides to cancel or exit their policy before maturity, LIC does not return the full premiums paid but pays a certain amount called the surrender value. This is a portion of the total premiums paid, adjusted for policy tenure, bonuses, and other factors.
The surrender value helps policyholders get some money back in case they need to discontinue the policy for any reason. It acts as a refund but is less than the total premiums paid.
Why is Surrender Value Important?
- It motivates policyholders to continue the policy, knowing some money will come back in hardships.
- Helps in financial planning during emergencies when a policy is no longer affordable.
- It is a key benefit for those who cannot hold the policy till maturity.
- Understanding surrender value prevents surprises if one decides to exit early.
Types of LIC Surrender Value Calculator
There are two main types of surrender values that LIC calculates:
Guaranteed Surrender Value (GSV)
- This is the minimum amount LIC guarantees to pay.
- It is usually calculated as a percentage of total premiums paid, excluding the first year’s premium.
- The GSV percentage increases as the number of years premiums are paid increases.
- This value does not consider bonuses or bonuses accumulated in the policy.
Special Surrender Value (SSV)
- SSV is usually higher than GSV.
- It includes the paid-up value (related to the sum assured and premiums paid), accumulated bonuses, and a surrender value factor.
- LIC pays the higher of the two values (GSV or SSV) when a policy is surrendered.
- SSV varies by policy terms, duration, and the bonuses declared.
How Does LIC Calculate Surrender Value?
The surrender value depends mainly on these factors:
- Total premiums paid (excluding the first year)
- Number of years premiums are paid
- Bonuses (if any) accrued on the policy
- Surrender value factors defined by LIC
General Formula for Surrender Value
Surrender Value = (Total Premiums Paid – First Year Premium) × Surrender Value Factor + Bonus Surrender Value
For Special Surrender Value, the formula is SSV=(Paid-up Value+Bonus)×SSV Factor
Where:
- Paid-up value = Sum Number of Premiums Paid / Total Number of Premiums Payable × Sum Assured × Number of Premiums Paid
- The bonus is the accrued reversionary bonus declared by LIC.
- The SSV factor varies by policy and duration.
When is Surrender Value Payable?
- Surrender value is usually payable only if the policyholder has paid premiums continuously for at least 3 full years.
- If surrendered before 3 years, usually no surrender value is paid.
- After 3 years, surrender value gradually increases with each additional year’s premium paid.
Using LIC Policy Surrender Value Calculator
The LIC Surrender Value Calculator is an online tool that simplifies this complex calculation. It estimates how much you can get if you decide to surrender your policy before maturity.
How to Use the Calculator
- Enter Policy Details:
- Select the LIC plan name (e.g., Jeevan Anand, New Endowment Plan).
- Input Sum Assured and Policy Term.
- Choose Premium Payment Frequency (yearly, half-yearly, etc.).
- Fill in Premium Information:
- Enter the annual premium amount.
- Enter the number of years premiums have been paid.
- Calculate:
- Click the calculate button.
- The surrender value is displayed instantly.
Sample Calculation for Understanding
Let’s take an example to see how surrender value is calculated:
GSV Calculation = ₹30,000 × 5 × 50% = ₹75,000
Bonus Value = ₹50,000 × 15% = ₹7,500
Estimated Surrender Value = ₹75,000 + ₹7,500 = ₹82,500
Benefits of Using the LIC Surrender Value Calculator
- Quick Estimation: Calculate approximate surrender value in seconds.
- Accurate: Based on the latest LIC surrender value factors and policy terms.
- Helpful for Planning: Helps policyholders make informed decisions.
- Free and Easy: Available online without any cost.
Important Points to Remember About Surrender Value
- Surrendering should be a last resort; it halts your insurance coverage.
- You get less than the total premiums paid; it is not a full refund.
- Bonuses add to the surrender value, but only from participating policies.
- Policies like ULIPs have different surrender rules.
- Always consult LIC or use a calculator for exact figures.
How to Surrender Your LIC Policy
If deciding to surrender the policy:
- Visit the LIC branch where the policy was purchased or the nearest branch.
- Submit the surrender form (Surrender Discharge Voucher).
- Provide original policy documents, ID proof (Aadhaar, PAN), and bank details.
- LIC processes the surrender and pays the value in 7-10 working days.
- You can also download the surrender form from the LIC official website before visiting.
What Affects LIC Surrender Value?
Several factors impact surrender value, including:
- Policy type: Endowment, whole life, and money-back policies differ.
- Policy tenure: Longer policy duration often has higher surrender value.
- Number of premiums paid: the more the premiums paid, the better the surrender amount.
- Accrued bonuses: Participating plans accumulate bonuses affecting surrender value.
- Surrender value factor: Increases with policy years.
Difference Between Surrender Value and Paid-Up Value
- Surrender Value: The amount received on cancellation of the policy before maturity.
- Paid-Up Value: The reduced sum assured when you stop paying premiums but keep the policy until maturity.
Common LIC Plans and Typical Surrender Value Percentage
FAQs on LIC Surrender Value Calculator
What is surrender value in LIC policy?
The surrender value is the amount paid by LIC to the policyholder if they cancel the policy before maturity. It is a partial refund of premiums paid.
When can I get surrender value for my LIC policy?
The source explains that surrender value is usually payable only after premiums have been paid continuously for at least 3 full years.
How is LIC surrender value calculated?
The calculator estimates surrender value using premiums paid excluding the first year for the GSV component, an applicable GSV factor, accrued bonuses and the Special Surrender Value component.
What is Guaranteed Surrender Value (GSV)?
GSV is the minimum amount guaranteed by LIC on surrender. In this calculator it is based on premiums paid excluding the first year and the applicable factor.
What is Special Surrender Value (SSV)?
SSV is an alternative surrender-value calculation that can be higher than GSV. The calculator compares the calculated components and uses the higher amount.
Are bonuses included in surrender value?
Yes. The calculator uses the accrued bonus entered by the user to calculate a Bonus Surrender Value using the source calculator’s 15% factor.
Does the first year premium count toward GSV?
No. The source calculator excludes the first year premium from the premium base used for GSV.
Does policy type affect surrender value?
Yes. The source explains that different LIC policy types can have different surrender rules and factors.
What does recovery percentage mean?
Recovery percentage compares the estimated surrender value with the total premiums paid and presents that relationship as a percentage.
Can I enter accrued bonuses separately?
Yes. The calculator has a separate Bonuses Accrued field for this purpose.
Which premium frequencies can I select?
The calculator provides Annual, Half-Yearly, Quarterly and Monthly options.
What is the difference between surrender value and paid-up value?
Surrender value is the amount received when a policy is cancelled before maturity, while paid-up value is the reduced benefit that can continue to maturity after premiums stop.
Should surrendering a policy be a last resort?
The source recommends treating surrender as a last resort because it ends the policy coverage and normally results in receiving less than the total premiums paid.
How can I get the exact surrender value?
The source states that this calculator is an estimate and recommends contacting an LIC branch or referring to the official policy document for an accurate figure.
What happens to bonuses on surrender?
Applicable bonuses up to the surrender date can contribute to surrender value for participating policies; the calculator reflects this through its Bonus Surrender Value input.
Conclusion
The LIC Surrender Value Calculator is an essential tool for LIC policyholders who need to understand how much they will receive if they surrender the policy before maturity. It helps estimate the payable amount based on various parameters such as premiums paid, policy term, bonuses, and surrender value factors.
Always remember that surrendering should be considered carefully, as it ends your policy coverage. Utilising the surrender value calculator provides clear insights and aids in making a financially sound decision.