Listen to this article
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. LIC Surrender Form 5074 – What It Is and Why It Is Mandatory
3. Surrender Value Of LIC
4. Types Of Surrender Value
5. LIC Policy Surrender – Alternative Option
6. LIC Policy Surrender – Minimum Period
7. LIC Surrender Process – Step-by-Step Timeline
8. Documents Required For Policy Surrender
9. LIC Policy Surrender Q&A
10. 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.
This process requires submitting the LIC policy surrender form along with the surrender discharge voucher, commonly referred to as LIC Form No. 5074, at the servicing LIC branch.
2. LIC Surrender Form 5074 – What It Is and Why It Is Mandatory
LIC Surrender Form 5074, also known as the Surrender Discharge Voucher, is a compulsory document required for the surrender of an LIC policy.
This form acts as an official acknowledgment that the policyholder has voluntarily chosen to discontinue the policy and accept the LIC surrender value in full and final settlement.
The surrender discharge voucher (Form No. 5074) is issued by LIC of India and must be duly filled, signed, and submitted along with the required documents at the LIC branch.
Without this form, the LIC policy surrender process cannot be initiated, regardless of eligibility or completion of the minimum premium-paying period.
By signing LIC Form 5074, the policyholder confirms that:
- The LIC policy surrender is being done willingly
- All future claims, bonuses, and benefits under the policy are relinquished
- The life insurance cover terminates permanently
- The surrender value received is accepted as the final pay-outs
This form is mandatory for LIC surrender before maturity, LIC policy closure, and LIC withdrawal across policy types, including endowment plans, money-back policies, and whole life plans.
In cases of joint policies, signatures of all policyholders are required on the policy surrender form LIC.
The LIC surrender form 5074 also captures critical information such as:
- Policy number and plan details
- Bank account details for NEFT credit
- Policyholder’s signature and date
- Witness confirmation, where applicable
Once submitted, LIC verifies the details and processes the surrender value, which is then credited directly to the registered bank account.
Any error or mismatch in LIC Form No. 5074 can lead to delays or rejection of the LIC policy surrender application, making accurate completion essential.
3. 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.
Many policyholders request a LIC surrender value certificate to verify the surrender amount before initiating the LIC policy surrender application.
The surrender value of LIC policy varies across plans and depends on the policy term, premium-paying term, and accumulated bonuses.
4. 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.
LIC guaranteed surrender value acts as the minimum payable amount and is often lower than expectations, especially during early policy years.
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.
LIC special surrender value is determined internally and may differ from the guaranteed surrender value depending on prevailing factors.
5. LIC Policy Surrender – Alternative Option
You can cease making premium payments yet keep your life insurance coverage instead of cancelling 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.
Many policyholders consider paid-up status as an alternative to LIC policy surrender to avoid losing accumulated benefits entirely.
6. LIC Surrender Process – Step-by-Step Timeline
The LIC surrender process follows a defined sequence that policyholders must complete to receive the LIC surrender value.
While the process is largely standardized across branches, the actual timeline may vary slightly depending on document verification and branch workload.
Step 1: Confirm Eligibility for LIC Policy Surrender
Before initiating the process, ensure that the minimum premium payment condition has been met.
For most LIC policies, at least three consecutive years of premium payment is mandatory to qualify for surrender value.
Policies surrendered earlier typically do not receive any pay-outs.
Step 2: Collect Required LIC Surrender Documents
The policyholder must arrange all mandatory documents, including the original policy bond, valid identity proof, cancelled cheque, and the LIC surrender form (Form 5074 – surrender discharge voucher).
Missing or incorrect documentation can delay the LIC policy surrender procedure.
Step 3: Fill and Submit LIC Surrender Form 5074
The LIC surrender form 5074 must be accurately filled and signed by the policyholder.
This form formally authorizes LIC to close the policy and release the surrender value.
The completed policy surrender form LIC must be submitted at the servicing LIC branch.
Step 4: Verification by LIC Branch Office
Once submitted, LIC conducts internal verification of policy details, premium payment history, and signatures.
In some cases, additional clarification or re-submission may be requested, extending the LIC surrender process timeline.
Step 5: Processing of LIC Surrender Value
After successful verification, LIC calculates the applicable guaranteed surrender value or special surrender value, depending on the policy terms.
The approved amount is then scheduled for payment.
Step 6: Credit of Surrender Amount to Bank Account
The final LIC surrender value is credited directly to the policyholder’s registered bank account via NEFT.
Typically, the entire LIC policy surrender process takes 7–15 working days from the date of document submission, provided there are no discrepancies.
Once completed, the LIC policy stands permanently terminated, and no future benefits, bonuses, or life cover remain active.
7. 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 cancelled two years after purchase.
A policy cannot ever be renounced during the first year after purchase.
Single premium LIC policy surrender is subject to specific surrender value rules defined in the policy document.
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.
Understanding the LIC policy surrender minimum period helps avoid premature surrender losses.
8. Documents Required for Policy Surrender
- Original ID proof like an Aadhaar 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
- Submitting complete LIC surrender documents is essential to prevent delays in surrender value processing.
9. 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.
Currently, LIC online surrender process is limited, and physical submission of documents at the branch is generally required.
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.
LIC policy closure before maturity usually results in a lower pay-outs compared to maturity benefits.
iii) Can I stop my LIC after 2 years?
Under a single premium plan, insurance may be cancelled two years after purchase.
A policy cannot ever be renounced during the first year after purchase.
LIC surrender after two years depends on the plan type and surrender value eligibility.
iv) What is the minimum duration for LIC policy?
Under the Single Premium Plan of LIC:
Following this plan, insurance may be cancelled 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.
LIC policy surrender rules differ based on premium structure and policy tenure.
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)
LIC maturity form submission is required to claim maturity benefits after policy completion.
10. 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!
Understanding LIC surrender process, surrender discharge voucher Form 5074, and required documents can help policyholders avoid unnecessary delays and confusion.
Leave a Reply