Did you buy a LIC Policy and want to surrender it now?
Many of you would want to surrender your LIC policy but cannot get a ‘LIC Surrender Form’ because the agents try to persuade you to continue the policy, citing absurd reasons. Don’t worry, This article is for you!
Today we are going to learn everything about LIC Policy surrender and also provide you with the LIC Surrender Form.
Let’s get started!
Table of Contents
1. What Is LIC Policy Surrender?
2. Surrender Value Of LIC
3. Types Of Surrender Value
4. LIC Policy Surrender – Alternative Option
5. LIC Policy Surrender – Minimum Period
6. Documents Required For Policy Surrender
7. LIC Policy Surrender Q&A
8. Conclusion
1. How does ‘LIC Policy Surrender’ work?
The term “surrendering the policy” refers to choosing to cancel a policy before it matures. The LIC insurance surrender value is the sum you are given at the moment. The life cover terminates instantly, and you won’t be able to resuscitate it again.
2. Surrender Value of LIC
Only if the policyholder has made uninterrupted premium payments for three years, can the LIC policy surrender value be Calculated for a normal policy.
As a result, LIC will not reward you with an incentive if you decide to cancel your insurance within the first two years.
The Basic Amount Assured is calculated as follows:
Basic sum assured (number of premiums paid/total premiums paid) plus total bonuses received, multiplied by X, where X is the surrender value factor.
3. Types of Surrender Value
a.) LIC Guaranteed Surrender Value (GSV)
The policyholder may only surrender their coverage within the Guaranteed Surrender Value after three years have passed.
This means that a minimum of three years must pass before the premium is paid. The Surrender Value will be around 30% of the premiums already paid if you give up after three years.
However, this does not include the first-year premium or payments for unintentional benefit riders.
b.) LIC Special Surrender Value
In most cases, it exceeds the guaranteed surrender value. It works as follows:
- If you pay premiums for more than three years but less than four, you can receive up to 80% of the maturity sum assured.
- You can receive up to 90% of the maturity sum assured if you pay premiums for more than 4 years but less than 5.
- You can receive up to 100% of the maturity sum assured if you pay premiums for more than five years.
The amount of premiums paid will be used to calculate the maturity sum Assured. The calculation is as follows:
(Original sum assured *(number of premiums paid/ number of premium payable) + total bonus received) * surrender value factor.
4. LIC Policy Surrender – Alternative Option
You can cease making premium payments yet keep your life insurance coverage instead of canceling your LIC policy. At this point, the insurance coverage is fully paid. A paid-up policy’s sum assured goes down. The term “paid-up value” refers to this decreased sum assured.
To the end of the policy term, the life insurance remains in effect. The paid-up value or the reduced sum insured is offered upon death or the maturity of the LIC policy.
5. LIC Policy Surrender – Minimum Period
The usual minimum period to surrender an LIC policy in the normal scenario is as follows:
a.) Under the Single Premium Plan of LIC
Following this plan, insurance may be canceled two years after purchase. A policy cannot ever be renounced during the first year after purchase.
b.) Under the Limited Period And Regular Premium Plan of LIC
The terms and conditions under this plan typically change for various policies. However, in general:
- The policy surrender period is two years if the policy has a term of ten years or less.
- The minimum term is three years if the policy is longer than ten years.
6. Documents Required For Policy Surrender
- Original ID proof like an Aadhar card, PAN card, or driver’s license
- A cancelled cheque
- A handwritten letter explaining the reason for surrendering the LIC policy.
- Original policy bond documents
- Request for surrender value payment
- LIC Surrender form- form 5074
- LIC NEFT form
- Details of your Bank Account
7. LIC Policy Surrender Q&A
i) Can I surrender my LIC policy online?
The “Surrender Discharge Voucher” or LIC Form No. 5074 can be printed out by contacting the LIC office or obtaining it online. It is difficult to find the form on the official LIC website and we have provided you with it. This form must be carefully filled out to cancel the LIC insurance and withdraw the surrender value from your bank.
ii) Can I close my LIC and get my money back?
Only if the policyholder has made uninterrupted premium payments for three years can the LIC policy surrender value be Calculated for a normal policy.
As a result, LIC will not reward you with an incentive if you decide to cancel your insurance within the first two years.
The basic amount assured is calculated as follows:
Basic sum assured (number of premiums paid/total premiums paid) plus total bonuses received, multiplied by X, where X is the surrender value factor.
iii) Can I stop my LIC after 2 years?
Under a single premium plan, insurance may be canceled two years after purchase. A policy cannot ever be renounced during the first year after purchase.
iv) What is the minimum duration for LIC policy?
Under the Single Premium Plan of LIC:
Following this plan, insurance may be canceled two years after purchase. A policy cannot ever be renounced during the first year after purchase.
Under the Limited Period And Regular Premium Plan of LIC:
The terms and conditions under this plan typically change for various policies. However, in general:
- The policy surrender period is two years if the policy has a term of ten years or less.
- The minimum term is three years if the policy is longer than ten years.
v) What is the LIC maturity amount?
The lump sum payment you get after the policy end date represents the projected value of your LIC policy maturity.
which is the total of your sum assured + bonuses + final additional bonus (FAB)
8. Conclusion:
We hope that this article provides you with enough clarity to surrender your LIC policy. Please share this with people who are in need of the LIC Surrender Form and process.
A professional Financial Planner will provide you with an expert view of the pros and cons of each investment option. Be safe and Make the right decision!
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