What is surrender value in LIC?
Surrender value is the amount LIC pays you if you close your life insurance policy before its maturity date. There are two types: Guaranteed Surrender Value (GSV) — the minimum amount guaranteed by LIC based on the number of premiums paid, and Special Surrender Value (SSV) — the actual surrender value which is generally higher than GSV, calculated based on the policy's paid-up value and surrender value factor.
How to calculate LIC surrender value?
To calculate LIC surrender value: First calculate the Paid-Up Value = (Number of Premiums Paid / Number of Premiums Payable) × Sum Assured + Bonus. Then, Special Surrender Value (SSV) = Paid-Up Value × Surrender Value Factor (from LIC's table, which depends on policy term and years elapsed). The higher of GSV and SSV is payable. Our calculator does this automatically.
What is Guaranteed Surrender Value (GSV) in LIC?
Guaranteed Surrender Value (GSV) is the minimum amount LIC guarantees to pay if you surrender your policy. GSV is applicable only after you have paid at least 2 full years of premiums. It is calculated as a percentage of total premiums paid (excluding taxes, rider premiums, and loading). The percentage increases with the number of years the policy has been in force.
What is Special Surrender Value (SSV) in LIC?
Special Surrender Value (SSV) is the actual value LIC pays, which is almost always higher than GSV. SSV = (Paid-Up Value × Surrender Value Factor) / 100. The Surrender Value Factor depends on the policy term and the number of years the policy has been in force. SSV includes the bonus amount, making it more beneficial than GSV in most cases.
After how many years can I surrender my LIC policy?
You can surrender your LIC policy after paying at least 2 full years of premiums. If you surrender within the first 2 years (free-look period is 30 days), you generally do not receive any surrender value — only the amount of premiums paid minus certain deductions. After 2 years, both GSV and SSV become applicable, and you get the higher of the two.
How is LIC surrendered value calculated for endowment plans?
For LIC endowment plans, the surrender calculation is: Paid-Up Value = (Premiums Paid / Total Premiums) × Sum Assured + Accrued Bonuses. Then SSV = Paid-Up Value × Surrender Value Factor (applied from LIC tables). GSV is the lower of the two. LIC pays the maximum of GSV and SSV. Endowment plans typically have higher surrender values than term plans because of the savings component.
What is the difference between surrender value and paid-up value?
Paid-up value is the reduced sum assured your policy will pay at maturity if you stop paying premiums (but keep the policy active). Surrender value is what you get if you close the policy entirely. Paid-up value is calculated as (Premiums Paid / Total Premiums) × Sum Assured + Bonus. Surrender value is a further reduced amount based on the paid-up value and surrender value factor.
Does LIC deduct any charges on surrender?
Yes, LIC deducts certain charges on surrender. In the first few years, a surrender charge applies, which reduces the total amount. The surrender charge is higher in early years and decreases over time. After 5 years, the surrender charge is minimal. Additionally, GST at 18% is applicable on the surrender charges. The net amount is credited to your bank account after these deductions.
How to check LIC surrender value online?
You can check your LIC surrender value online through: 1) LIC Customer Portal (licindia.in) — login with your policy number, 2) LIC App — check surrender value under policy details, 3) SMS service — send POLICY to 5676788, 4) Our LIC Surrender Value Calculator — enter your policy details for an instant estimate. For exact figures, log in to the official LIC portal.
Can I get a loan against my LIC policy instead of surrendering?
Yes, you can take a loan against your LIC policy instead of surrendering it. The loan amount is typically 85-90% of the surrender value. The interest rate is around 9-10% per annum, which is lower than personal loans. Taking a loan preserves your life cover and allows you to get the maturity amount later. This is often better than surrendering, especially if your policy has many years left.
What is the surrender value factor table in LIC?
The Surrender Value Factor (SVF) table in LIC determines what percentage of the paid-up value is payable as Special Surrender Value. The SVF depends on two factors: the total policy term and the number of years the policy has been in force. For example, a 20-year policy surrendered after 5 years may have an SVF of 50%, while after 10 years it could be 70%. LIC publishes these factors in their official documentation.
Is LIC surrender value taxable?
Under Section 10(10D) of the Income Tax Act, the surrender value of a life insurance policy is tax-free if the premium does not exceed 10% of the sum assured (20% for policies issued before April 1, 2012). For policies issued after April 1, 2023, the premium limit is still 10%. If your premium exceeds this limit, the surrender value may be taxable as capital gains.
How much surrender value will I get after 5 years?
The surrender value after 5 years depends on your policy type, sum assured, bonus accumulated, and premium payment frequency. Generally, after 5 years, you can expect 50-70% of the total premiums paid as surrender value. For example, if you paid ₹50,000 per year for 5 years (total ₹2,50,000), the surrender value could range from ₹1,25,000 to ₹1,75,000 depending on bonuses accumulated.
What happens if I surrender my LIC policy within 2 years?
If you surrender your LIC policy within 2 years, you do not receive any surrender value. The policy lapses with zero surrender value. However, you may receive a small refund after deducting the risk premium and other charges. This is why it is generally recommended to not surrender in the first 2 years unless absolutely necessary.