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Having an LIC policy ensures that if something happens to you in the future, your family’s financial needs will be taken care of. However, at some point in time, you might close the policy before its maturity. The closing/discontinuation of the policy is called surrendering and now you can check the LIC policy surrender status online.
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Surrendering a LIC policy means canceling it before its full term ends. LIC allows policyholders to surrender their policies at any time. People might surrender their policies if they’re unhappy with the policy’s terms, features, or benefits.
However, you can only surrender your policy after paying premiums for at least three years. When you surrender your policy, LIC will give you a surrender value, a portion of the money you’ve paid in, and your coverage will end.
Generally, surrendering LIC policy isn’t recommended because the surrender value is usually lower than you paid. Instead of surrendering, you might consider converting your policy to a paid-up status. This way, you avoid penalties and retain some benefits without continuing premium payments.
Follow the below-mentioned steps if you want to surrender your LIC policy online:
Visit the official website of the LIC
Register as a new user, and if you are already registered, then click ‘login here’
Login to the LIC portal and select ‘Enrol Policies’ displayed on the left side of the page
Click on ‘Click to Enrol New Policies’ and hit on ‘Proceed’
Then, enter the required details, such as the policy number, premium amount, and policyholder’s name, and click ‘Enroll your policy.’
After enrolling in the policy, click ‘view enrolled policy’
Select ‘Click for details’ from the policy lists under the column ‘Loan and Bonus’
The loan eligibility and the surrender value can be found here.
Note—The suitable amount will be deducted from the surrender value if you have taken a loan against your LIC insurance policy.
You can also apply for surrendering LIC policy offline by visiting it’s any of the branches. Follow the below steps to surrender the LIC policy offline:
Visit the nearest branch of LIC, and try to visit the branch from where the policy is purchased.
You can ask the LIC office about the type of surrender or download the LIC policy Surrender Form directly from the LIC website.
To surrender the LIC policy, submit the relevant documents, such as ID proofs, an Aadhar card, a PAN card, and a cancelled cheque with your name on it.
After completing all the formalities, the cash will be transferred to your registered bank account within 7-10 working days.
The following are the documents required for surrendering LIC policy:
The bond of the policy i.e. policy documents
Form No. 5074 of LIC Policy Surrender
Information related to the policyholder’s registered bank account
ID proofs include PAN card, Aadhar, driving license, and voter ID.
Cancelled cheque from the policyholder’s bank
Surrender value is the portion of money or amount paid to the policyholder by the insurance company before the maturity date. In other words, it means closing the policy before the maturity date. Surrender value is only payable on insurance plans having a savings element attached to it. The calculation of the surrender value is based on the premiums paid by the life assured until the surrender date.
There are two types of surrender values:
The Guaranteed Surrender Value is the amount paid by the insurance company to the policyholder when they decide to cancel the policy before its maturity date, provided the policy has accumulated a surrender value. This amount is usually a percentage of the total premiums the policyholder pays, but this percentage can vary depending on the policy type and its term. Typically, this percentage increases as the policy approaches maturity.
The Guaranteed Surrender Value is 30% of the policyholder's premiums, excluding the premiums from the first policy year and any rider premiums.
For Example
Saloni paid Rs. 30,000, that is., Rs 10,000 X 3 in the starting 3 years of the policy for a SA (sum assured) of Rs. 3 Lakh. In this, the minimum value for surrender Saloni will receive is 30 percent of 20,000, which becomes Rs. 6000.
The special surrender value for LIC policies typically exceeds the guaranteed surrender value. If you have paid premiums for over 3 years but less than 4, you may receive up to 80% of the assured maturity sum. For premiums paid between 4 and 5 years, you can get up to 90% of the maturity sum assured. If you have paid premiums for more than 5 years, you can receive up to 100% of the assured maturity sum.
Upon policy discontinuation, a life assured receives a special surrender value, computed as the sum of the total bonus and paid-up value multiplied by the surrender value factor.
For Example
Let’s say if Rs. 15,000 is paid by Saloni on a yearly basis for a SA of Rs. 3 Lakh for a policy term of 20 years. She stopped paying premiums from 4th year. If Rs. 30,000 comes out to be a bonus and 30% is the surrender value factor, then the paid-up value will be equivalent to Rs. 60,000. The Special Surrender Value will be [(60,000 + 30,000) X (30/100)] i.e., Rs. 27000.
Now you can surrender your LIC policy if you are not satisfied with the policy’s terms and conditions through an online mode. You can also determine the status of the LIC policy surrender online by visiting LIC’s official website. You can only surrender the policy after three years. This means that you must hold the policy for a minimum of three years. Instead of surrendering the LIC policy, it is recommended that the policy be made a paid-up one. The paid-up policy provides a death benefit on maturity while surrendering. If you're looking for more affordable coverage options, consider Term Insurance from LIC, which offers pure protection for your family’s financial security.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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