How to calculate the surrender value of lic policy in 2021


How to calculate the surrender value of lic policy- Dear friends, today we will discuss how to calculate the surrender value of lic policy. It is a difficult thing to calculate the surrender value of a lic policy. Then, how to calculate the surrender value of lic policy? And surrender value calculator online.

A person buy a life insurance policy for long term. People buy a lic policy for a specific reason or you may say to fulfil a specific need. But sometimes a person’s need or investment perspective may be changed over the time or any economical difficulty also may come. In this situation the Life Insurance Corporation of India gives the provision to surrender the policy before the full term and get some surrender value under some conditions. It is a great facility of a lic policy.

What is surrender value?

Surrendering a policy means terminating the policy before completion of the full term or maturity date. The insurance professionals  call the surrender value as SV.

Defination of surrender value-The amount of money payable to the policyholder on surrendering a policy by the insurance company is called surrender value.

Surrender value exists only in the with-profit policies. In these with-profit policies the surrender value would be payable on the surrender of the policy before the completion of full tenure.

But In many cases, depending on the terms and conditions of that particular policy surrender charges has been levied. The final surrender value payable is determined after deduction of charges if any.

Usually, a policy gets the eligibility after completion of three years but some companies give the surrender value after completion of two years.

Types of surrender value- 

  1. Guaranteed surrender value
  2. Special surrender value

1. Guaranteed surrender value– Guaranteed surrender value is the amount that is guaranteed to be paid by the insurance company in case of surrendering the policy during the policy term after the policy acquires a surrender value. Guaranteed surrender value is generally a certain percentage of total premiums paid excluding the additional premiums paid for riders if any. Percentage may vary depending on the policy term and the policy year at which you are surrendering the policy. Percentage or the surrender value factor increases with policy terms. That means percentage applicable will be more as the policy nears maturity.

2. Special surrender value-

Special surrender value is a non-guaranteed amount which is either equal to or higher than the guaranteed surrender value. The special surrender value will depend on some factor- (a)number of premium instalments paid by policy holder (b) policy term and (c) the bonus accrued. Special surrender value is calculated as:

Special surrender value = [{Basic sum assured X Number of premiums paid/ number of premiums payable} + accrued bonuses] X applicable surrender value factor.

How to calculate the surrender value of lic policy

How to calculate the surrender value of lic policy

How to calculate the surrender value of lic policy-Minimum guaranteed surrender value is equal to 30%of all paid premium minus one premium . There is no surrender value till 3 premiums are paid .

For example , if the premium is 10000 and 3 premiums are paid the minimum guaranteed SV will be 30%of 20000 i.e 6000 .

This percentage keep increasing with the age of policy . By the time policy teavhes maturity then percentage become 100%.

You have not given the premium let me assume it 10000 . You paid 60000 the you should get 40%of 50000 that is 20000 plus 50%of accrued bonus of 46000 that is 23000 .

Your policy surrender value should be 43000.

Moreover , you also get surrender value of accrued bonuses as per defined formula of the policy .

On surrender , you will receive SV of paid premium plus SV of acrrued bonuses.

How to calculate the surrender value of lic policy online-

.Surrender value calculator can be accessed online on the website of an insurance technology site. All you need to do is input some basic details such as your name, mobile number, plan name, policy term, number of premium instalments paid, premium payment mode, instalment premium and number of years completed by the policy. Once you submit these details, the LIC policy surrender value calculator instantly calculates the approximate surrender value and the value will be displayed as a result.

Hope you enjoyed the article very much. Thanks for being with us. please like it and share the article to your friends.


Leave a Comment