how to surrender LIC policy

Learn How to Surrender Lic Policy Online Before Maturity?

Are you researching “How to Surrender LIC Policy Online?” It’s a very simple process learning now how to surrender an LIC policy online before maturity, it allows placeholders to easily complete the maturity. You can easily find a step-by-step guide inside the LIC website where you can easily find the surrender option.

You don’t need to visit. The online surrender method eliminates the need to visit a branch in person, thereby saving time and effort.  Before surrendering, however, policyholders should be aware that this decision often involves a financial loss in terms of the surrender value received compared to the total premiums paid.

What Is the Surrender of LIC Policy?

 If you are looking to terminate your insurance contract before the maturity you need to surrender your LIC Policy. When a policyholder decides to surrender their policy, they are essentially requesting the policy’s premature cancellation in exchange for a sum of money known as the “surrender value”. This value is typically a fraction of the premiums paid and can vary depending on the type of policy, the duration it has been, and the terms and conditions set by LIC. 

When Can You Surrender the LIC Policy Online?

When the policyholder terminates the policy online before the maturity date we call it a surrender of a LIC policy. Once the surrender is done they receive a small amount of money that we say as surrender value, which is calculated by using the following formula: percentage of the premiums paid minus any applicable charges. It depends on a few options and conditions when a policyholder can surrender the policy. 

We have covered the two different plans on how we can surrender the LIC policy online before maturity

Types of Premium Plan:

1- Single Premium Plant
2- Limited Period and Regular Premium Plan.

1. Single Premium Plan

A Single Premium Plan says,”‘At the start of the policy, a policyholder has to pay the entire premium in one lump sum”.
Below we have added the details when you surrender the policy:

  • Minimum Period: For the LIC Single Premium Plan, You have to complete the minimum period of 1-3 years before you can surrender the policy.
  • Surrender Value: If surrendered after this minimum period, the policy may acquire a certain surrender value, which is a portion of the single premium paid. The policy terms decide Surrender and how long the policy is in process.

2. Regular Premium Plan

A Regular Premium Plan says that the policyholder has to pay the premium for a specified period or throughout the policy tenure at regular intervals (monthly, quarterly, half-yearly, or yearly).

  • Minimum Period: In this type of plan, you must have paid premiums for at least 2 to 3 years. This is to ensure that you have had a chance to benefit from the policy’s coverage before surrendering it.
  • Paid-up Value: If you’ve paid premiums for less than the minimum required number of years, the policy may lapse without any surrender value. If you’ve paid premiums for at least a certain minimum period, the plan might become paid-up if you stop paying premiums, and it may accrue a surrender value.

How to Calculate the Surrender Value of LIC Policy?

The surrender value of an LIC policy is the amount that the policyholder will receive from the insurance company if they decide to exit the policy before it matures. Two types of surrender values are typically calculated by LIC: “Guaranteed Surrender Value (GSV)”, and “Special Surrender Value (SSV)”.

Guaranteed Surrender Value (GSV)

This is the surrender value guaranteed by the policy, and it is a percentage of the total premiums paid excluding the first-year premium and any extra premiums for additional benefits such as accident or term riders. The percentage of GSV depends on the policy term and the number of years for which premiums have been paid.

The formula usually looks something like this:

GSV = (GSV factor) x (Total premiums paid – First year’s premium)

The GSV factor is determined by LIC and depends on how many years the policy has been in force.

Special Surrender Value (SSV)

The SSV is usually higher than the GSV and is calculated based on the sum assured, bonuses accumulated, and the number of premiums paid. The SSV is not guaranteed and can vary depending on the performance of LIC’s life fund where the premiums are invested. Generally, for SSV the policy must be in force for a minimum number of years which LIC decides based on policy conditions.

The formula for SSV could be:

SSV = (Sum Assured + Accumulated Bonuses) x SSV factor

The SSV factor is declared by LIC from time to time, and it is based on the company’s experience with returns on investments and other actuarial assumptions.

What are the Types of Surrenders in LIC Policy?

Life Insurance Corporation of India (LIC) offers its customers various life insurance policies that come with different terms and conditions. Surrendering an LIC policy online before maturity shows that the policyholder decides to terminate the policy, thereby foregoing the future benefits of the policy in exchange for a surrender value from the insurance provider.

Here are the common types of surrenders in LIC policies:

Full Surrender

When the policyholder decides to fully terminate the policy, it’s called a full surrender. This means that the policyholder will stop paying premiums and give up any future claims to the policy benefits. Upon a full surrender, LIC will pay the policyholder the surrender value, usually a percentage of the premiums paid, minus any applicable surrender charges.

Special Surrenders

Special surrenders may apply in some exceptional circumstances, where LIC might define terms under which the policy can be surrendered with conditions from standard surrender procedures. These could include cases like extreme financial hardship, critical illness, or other unforeseen events where LIC provides a more favorable surrender value or reduced charges.

Surrender Due to Non-Payment of Premiums

If a policyholder stops paying premiums and does not renew the policy within the grace period, the policy may automatically be surrendered. If the policy has acquired surrender value, the policyholder might receive this value as per the policy’s terms. However, if the policy has not acquired any surrender value, the policyholder may not receive any payout.

Documents Required to Surrender LIC Policy Online Before Maturity

If you are looking to surrender your LIC policy online, you need to have certain types of documents for a smooth and efficient process. Below is a list of the essential documents required for surrendering an LIC policy.

  • Original Policy Bond Documents: Ensure you have the original policy bond documents issued by LIC. These documents serve as proof of your insurance coverage.
  • Request for Surrender Value Payment: Include a formal written request for surrender value payment. This document communicates your intent to surrender the policy and initiates the process.
  • LIC Surrender Form 5074: Complete the LIC Surrender Form, specifically Form 5074, providing accurate and relevant details. This form is crucial for processing the surrender request.
  • LIC NEFT Form: Fill out the LIC NEFT (National Electronic Funds Transfer) form, facilitating a direct and secure transfer of the surrender value to your bank account.
  • Bank Account Details: Provide accurate and up-to-date bank account details to ensure the seamless transfer of funds. Include the bank’s name, branch, account number, and the IFSC code.
  • Original ID Proof: Have an original ID proof document such as an Aadhar card, PAN card, or driver’s license. This is essential for verifying your identity.
  • Canceled Cheque: Submit a canceled cheque corresponding to the bank account mentioned in the NEFT form. This helps validate the account information provided.
  • Hand-Written Reason Letter: Write a hand-written letter explaining the reasons for surrendering the LIC policy. This letter provides context for discontinuing the policy.

Process to Surrender LIC Policy Online Before Maturity

Surrendering your LIC policy online involves a process to ensure a seamless transaction. Before initiating the surrender, it is advisable to check your LIC policy status. Below, is a step-by-step guide on “How To Surrender LIC Policy Before Maturity”:

Step 1: Reach out to your nearest LIC branch or the agent who facilitated the policy purchase. They will guide the surrender process and provide you with the necessary forms.

Step 2: Complete the surrender request form provided by LIC. Ensure that all details are accurately filled out, including personal information, policy details, and reasons for surrendering.

Step 3: Collect all the required documents such as the original policy bond, surrender form (Form 5074), NEFT form, bank account details, original ID proof, canceled cheque, and a handwritten letter explaining the reasons for surrender.

Step 4: Visit your nearest LIC branch or hand over the duly filled and signed documents to your LIC agent. Alternatively, LIC may have an online portal where you can upload the required documents.

Step 5: LIC will initiate a review of your surrender request, a process that typically takes a few weeks. During this period, the insurance company will verify the provided information and process your request.

Step 6: Upon successful submission of the documents, LIC will provide you with an acknowledgment receipt. This receipt serves as confirmation that your surrender request is in process.

What Happens After Surrendering the LIC Policy?

If any policyholder is looking to terminate the policy before reaching its maturity date, they can decide to surrender the policy anytime.

What happens when the LIC policy gets suspended?

  • Surrender Value Calculation: Once LIC receives the surrender request, they calculate the surrender value of the policy. The surrender value is the amount that the policyholder is entitled to receive upon surrendering the policy.
  • Surrender Charges: Some policies include surrender charges, which are fees deducted from the surrender value for terminating the policy early.
  • Payment of Surrender Value: After the surrender value is calculated and any applicable surrender charges are deducted, LIC will process the payment. 
  • Tax Implications: The surrender of an LIC policy may have tax implications for the policyholder. Depending on the policy terms and the Income Tax Act, the surrendered amount may be tax-free or taxable.
  • Loss of Insurance Coverage: Once the policy is surrendered, the policyholder loses all insurance coverage associated with the policy. This means that no death benefit will be paid out in the event of the policyholder’s death after surrender.
  • No Maturity Benefits: By surrendering the LIC policy, the policyholder does not get any maturity benefits that would have been obtained if the policy had been kept in force until the end of its term.
  • No Bonuses or Additional Benefits: Any bonuses, guaranteed additions, or other benefits that might have been accrued or were applicable upon maturity will also be canceled upon surrender.

What Else Can Be Done If Not Surrendering the LIC Policy?

If you are surrendering your LIC policy because it no longer meets your needs or you are facing financial difficulties, you should be aware of alternative options that might be more beneficial. 

Here are some alternatives you might consider before choosing to surrender your LIC policy:

  • Loan Against Policy: Many LIC policies offer the option to take a loan against the policy’s surrender value. This could provide you with the funds you need without having to give up your coverage.
  • Premium Waiver: If you’re going through a temporary rough patch financially, some policies may have a premium waiver option.
  • Reduced Paid-Up Insurance: Instead of surrendering the policy, you can opt for a reduced paid-up insurance option if you’ve paid premiums for a certain number of years.
  • Policy Conversion: Certain types of LIC policies allow for conversion into another plan with different benefits and premium structures. 
  • Partial Withdrawals: If your policy has an investment component (like in a unit-linked insurance plan or an endowment policy), it may be possible to make partial withdrawals to meet your immediate financial needs.

Conclusion on how to surrender LIC policy: 100 words

In conclusion, To surrender an LIC policy online before maturity, it is crucial to consider the decision carefully, as it may result in a financial loss if the surrender value is less than the sum of premiums paid. Policyholders must ensure completion of the minimum lock-in period, usually 2-3 years, before surrendering, to be eligible for the surrender value. 

The policyholder should visit the nearest LIC branch with policy documents, ID proof, and a canceled cheque for direct credit of the surrender value. After submitting a duly filled surrender form and completing verification, LIC processes the request. Policyholders should also inquire about any applicable taxes or charges before finalizing the surrender.

FAQs For surrender LIC policy

Can I surrender my LIC policy online?

Yes, you can surrender your LIC policy online. LIC offers an online surrender option for added convenience.

What should I do if I can’t afford my LIC policy anymore?

You can consider converting it into a paid-up policy or taking a loan against its cash value.

Can I surrender my LIC policy just after purchasing it?

No, you have to keep your LIC policy or pay the premium at least for three years before surrendering it completely. There are no charges levied on surrendering the policy.

Can I revive my already surrendered policy?

If you surrender your policy and get your surrender value in return, then you can not renew the policy.

Are vested bonuses included in the surrender value?

Yes, the surrender value of any bonuses will be included in the policy’s surrender value if they were earned before the policy was surrendered.

When will I receive the surrender value?

The amount of the surrender will be credited to your account within 15 business days after the approval of your application by the LIC.

Will I immediately get my money back once I surrender my LIC policy?

The surrender process involves a review, and it may take some time. The timeline for receiving the surrender value varies; immediate refunds are uncommon.

How much do I get if I surrender my LIC policy?

The surrender value depends on factors like policy tenure and premiums paid. You’ll receive a calculated amount, which may be less than the total premiums paid.

Can I surrender the LIC policy online?

Yes, LIC often allows online policy surrenders. Visit the official website or contact customer support for guidance on the online surrender process.

How to check the surrender value of the lic policy online?

Log in to the LIC portal, navigate to your policy details, and find the surrender value. Online account services usually provide this information for policyholders.

How to surrender the lic policy after 5 years?

Surrendering after 5 years is possible. Contact your LIC branch or use online services to initiate the process, considering the policy’s terms and conditions.

How much time does it take to surrender the lic policy?

The surrender process duration varies. Generally, it takes a few weeks for LIC to process the request and disburse the surrender value.

Can I surrender the lic policy in any branch?

Yes, you can surrender your LIC policy in any LIC branch. Visit the nearest branch with the necessary documents or follow the online surrender process.

How to surrender the lic policy after 3 years?

After 3 years, you can surrender your LIC policy. Contact the LIC branch or explore online options to initiate the surrender process according to policy terms.

How to surrender the lic policy without the original bond?

You can surrender your LIC policy without the original bond. Provide alternative identification and policy details when contacting LIC for the surrender process.x

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