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LIC Policy Surrender: What Needs to be Done

There are different types of surrenders in an LIC policy, ranging from surrender value to guaranteed surrender value and special surrender value. There is also a paid-up value. There is a list of documents that have to be submitted.
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Life insurance policies are fairly simple when it comes to understanding their features. One of those features is ‘surrender of policy’.

As simple as purchasing an LIC policy is, the process of surrendering the same is equally effortless. With respect to a term insurance policy, if you put your premium payment on hold, your policy will lapse. However, this is only with regards to the risk cover. There are no additional costs or pitfalls attached to this.

In case of a traditional life insurance policy like a money back plan, if you choose to discontinue at an early stage, then the insurance company substantially reduces the primary maturity sum amount. As a result, the amount of money received in the form of in-hand returns is also reduced to a great extent.

Eligibility Criterion to Surrender LIC Policy

It is typically not recommendable to surrender LIC policy, however, if the need arises one has to bear in mind that the eligibility criterion in this regard is three years. This means that you have to have held the policy for a minimum timeframe of three years before you can surrender it. Once you have surrendered your LIC policy, the insurer will provide you with a portion of money known as ‘accumulated bonus’ along with the premiums that you have paid for that period of time.

Demerits of Surrendering LIC Policy:

  • The primary reason for investing in a life insurance policy is to secure the financial future of an individual’s family. This reason is defeated when a policyholder surrenders his life insurance policy, as the life cover factor is not available anymore.
  • If a policyholder wants to invest in the same LIC policy a few years later, he/she will have to pay an increased premium amount. This is because the individual’s age has increased and subsequently, the risk too.
  • Depending on the terms and conditions of the LIC policy, the accumulated bonus will be given. Since surrendering a policy is considered equivalent to breaking a contract, the policyholder will receive only a limited portion of money that he/she has paid as premiums.
  • Surrender value is negated completely if the policyholder wishes to surrender his policy before completion of three years.

Types of Surrenders in a Conventional LIC Policy:

  • Surrender Value: If you are terminating your LIC contract prematurely, you will still be eligible to a portion of money known as surrender value. This amount is usually bigger than guaranteed surrender value and special surrender value.
  • Guaranteed Surrender Value: As the name suggests, this is a portion of money that is payable to the policyholder if he/she volunteers to surrender the LIC policy. Guaranteed surrender value is essentially 30% of the overall premiums that you have paid so far. This, however, excludes the premiums that were paid during the first year of the policy, extra premiums, and the ones paid towards riders (accident rider).
  • Special Surrender Value: If you have paid premiums towards your LIC policy for more than three years, but less than four years, then you will receive 80% of the maturity sum assured as a special surrender value. Moreover, if you have paid your premiums for more than four years, but less than five years, then you will receive 90% of the total maturity sum assured as a special surrender value. A 100% special surrender value is given out if the policyholder has regularly paid the premiums for five years.

Paid Up Value: What Does it Mean?

Fundamentally, any policy that has lapsed within three years of purchasing it, and for which premiums have been paid diligently (for three years), is referred to as a paid up policy. The paid up value is essentially a reduced sum assured amount which was originally available when the policy was bought.

Surrender Value Vs Paid Up Value

Paid Up Policy Surrendered Policy
Policyholder does not receive a lump sum amount of money immediately Lump sum amount is immediately available to the policyholder
On the event of the policyholder’s death or maturity of the policy, the total paid up value is given On the event of maturity of the policy or the life assured’s death, no compensation will be given
Not eligible for any extra future bonus Not eligible for any extra future bonus

What are the Important Documents Required for Surrendering LIC Policy?

The following are the documents that are mandatory for surrendering LIC policy:

  • The policy bond (original document)
  • Physical copy of LIC Policy Surrender Form No.5074
  • Bank account information of the policyholder will be required
  • Proof of identification such as voter’s ID, PAN, or driving license will be required when surrendering LIC policy.

Approximately five to ten days after the required documents and form have been submitted, the fund will be transferred to the policyholder’s bank account.

LIC Policy Surrender: What Needs to be Done Reviews

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  • Kotak Life Life Insurance
    "Excellent"
    0.5 4.5/5 "Excellent!"
    I am a employee of Kotak Life and have taken one policy for saving also company has provided me a policy. It is a long term policies. The tenure period is 15 years. I pay the premium of 18K yearly through online or sometimes cash. The online app is good and the transactions are done immediately.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 23, 2019
  • Birla Sun Life Insurance
    "Excellent service"
    0.5 5.0/5 "Blown Away!"
    I have applied my life insurance with birla life, there agent was good, they have explained me clearly about the policy benefit, and there coverage, and the premium amount they have charged me was nominal, it was on yearly basis , and i use to pay premium through on line.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 23, 2019
  • HDFC Life Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been holding my life insurance with HDFC LIFE from long time, and I itself have applied for this insurance is i have knowledge regarding this,and there premium amount they have given me was nominal ,i use to pay up to 3500 as an premium on yearly basis,and there is no hidden charged , and i pay premium through on line.
    Was this review helpful? 0
    , jaipur
    Reviewed on Jan 23, 2019
  • ICICI Prudential Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been holding my life insurance with ICICI prudential ,i took this insurance long bank , and i was agent and previously i was Ex -employee for them ,so i have knowledge about the insurance which insurance will be best ,and i pay premium on yearly basis, i use to pay through on line mode.
    Was this review helpful? 0
    , jaipur
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good "
    0.5 4.5/5 "Excellent!"
    I have one LIC policy and its a term plan which was taken in the year of 2000 through an agent. I am happy with the service and the benefits are good. Am paying the premium of 25K per year through online. The sum assured value is 5L and I need to pay the premium till 2020.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Not satisfied"
    0.5 3.0/5 "Satisfactory"
    I am having LIC policies and am using the service for more than 10 years. I only visit the branch and never contact the customer care center. I think its a money back policy and need to pay only once. I have paid the premium of 45K for 3 years through cheque. The benefits are below average.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    My life is insured with LIC from last 12 years and it is a money back policy. I get money back after every 5 years in this policy. I pay my premium once in 6 months and i am convenient with the payment options. Tenure period for this policy is after 30 years.
    Was this review helpful? 0
    , surat
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Best policy"
    0.5 5.0/5 "Blown Away!"
    I have a life insurance policy with LIC from last 15 years and it is a long term policy. My premium amount is auto debited from the salary account for this policy. I am happy with the returns and benefits of this policy. This policy will get matured at 2028.
    Was this review helpful? 0
    , pune
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I have a life insurance policy with LIC from last 8 years and it is a money back policy. I get money back after every 5 years and this policy is for 20 years. I pay my premium on annual basis through online and i get good returns after maturity period.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 3.5/5 "Pretty good"
    I have taken Jeevan bheema from Lic as its been Government institution , so the assurance is there regarding the policy benefits , I used to get income tax benefits I make the payments through auto debit option overall am pretty much satisfied with the service and response. .
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 3.5/5 "Pretty good"
    I took this Life insurance Money back policy from Lic insurance company mainly because of the good returns, its long tenure period of 20 years , the payment can be done through only payments Quarterly . The best about the policy is claim rate is high compared to other policy available in the market. There customer service and customer response is good .
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 3.5/5 "Pretty good"
    I took life insurance jeevan saral policy from life corporation of India . I already paid for few years . As the policy coverage of good sum assures amount , which was my first policy at my initial stage . It has good benefits like accidental coverage and critical illness coverage . The tenure period is 25 years . Overall am satisfied with my policy
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 3.5/5 "Pretty good"
    I took this life insurance jeevan anand policy from Lic insurance company mainly because of the good returns. The tenure period is 20 where i already made the payment for first 2 yeairs . Am doing my payment yearly through online banking this policy covers accidental benefits and critical illness .
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 23, 2019
  • LIC Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been using my life insurance with Life insurance corporation of India, there service is good, the agent had explain me about the policy coverage,and about plan benefits clearly, and the premium amount they have charged me on yearly basis, and they have charged me up to 3000 it is nominal , and premium amount i use to pay through on line.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 22, 2019
  • Birla Sun Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been using my life insurance with Aditya birla , there service is they provide me was excellent, till now i have not face any issue in that, there premium amount they have charged me in monthly basis,they have charged me up to 6200, and it is nominal to me , the agent had explain me about the policy coverage and plan benefit properly,i use to pay on on line mode. overall service is good.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 22, 2019
  • LIC Life Insurance
    "Good policy"
    0.5 5.0/5 "Blown Away!"
    I have purchased my money back policy long bank and twice i have received the cash in my account without giving any request and I'm quite happy about the received sum assured amount. I pay the premium amount of Rs. 600 every month. I make the premium through online.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 22, 2019
  • LIC Life Insurance
    "Good policy"
    0.5 5.0/5 "Blown Away!"
    Bought my life insurance policy from LIC. I have chosen the plan called Jeevan Anand. This is the tax benefits policy. I pay the premium amount of Rs. 1000 every month with the tenure period of 2.5 lakhs. This is a 15 years tenure period policy.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 22, 2019
  • LIC Life Insurance
    "Good policy"
    0.5 5.0/5 "Blown Away!"
    I have bought the life insurance policy in the year of 2011. My agent has suggested me about this policy. I have been paying the premium amount of Rs.10300 through ECS. I have chosen the mode of annually. Overall, I'm satisfied with the LIC policy.
    Was this review helpful? 0
    , ahmedabad
    Reviewed on Jan 22, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    Purchased my money back from LIC. I have selected the LIC company for my policy its because of the better option. They are providing various payment mode facilities. I'm satisfied with the sum assured amount and LIC customer care service is really fine.
    Was this review helpful? 0
    , indore
    Reviewed on Jan 22, 2019
  • Kotak Life Life Insurance
    "Good Insurance Policy"
    0.5 4.0/5 "Great!"
    I have purchased a accidental covered policy from Kotak Mahindra bank. Kotak gives more online services and the app is really good. I have got this policy 5 months back. I made a premium amount of Rs. 1200 and this policy covers only for me. I have not claimed anything in this policy so far.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 22, 2019
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