Understanding LIC Surrender Value: Formula, Chart, and Calculator
If you own a life insurance policy from LIC and you’re considering surrendering it, you may be wondering about the surrender value. The surrender value is the amount you’ll receive from the insurance company if you terminate your policy before its maturity date. In this article, we’ll explain what LIC surrender value is, how it’s calculated using the formula, and how to use a surrender value chart or calculator.
What is LIC Surrender Value?
The surrender value is the amount of money that the policyholder receives from LIC if they surrender the policy before its maturity date. The surrender value is calculated based on the premiums paid and the policy’s accumulated bonuses. It’s important to note that the surrender value is typically lower than the sum of premiums paid.
How is LIC Surrender Value Calculated?
The formula for calculating LIC surrender value is as follows:
Surrender Value = (Number of Premiums Paid/Total Number of Premiums) x (Sum Assured + Accumulated Bonus)
Let’s break down this formula to understand how to calculate the surrender value:
Number of Premiums Paid: This refers to the total number of premiums paid up to the date of surrender.
Total Number of Premiums: This refers to the total number of premiums that should have been paid for the policy to mature.
Sum Assured: This is the amount of money that the policyholder is guaranteed to receive from LIC if they don’t surrender the policy and it matures.
Accumulated Bonus: This refers to the amount of bonus that the policy has earned up to the date of surrender.
Once you have these values, you can plug them into the formula and calculate the surrender value.
LIC Surrender Value Chart
LIC surrender value chart is a table that shows the surrender value of the policy based on the policy term and the number of years the policy has been in force. The chart is provided by LIC and can be used as a reference to estimate the surrender value of the policy. It’s important to note that the surrender value chart is indicative and the actual surrender value may differ based on the formula used.
LIC Surrender Value Calculator
LIC surrender value calculator is a tool that can be used to calculate the surrender value of the policy online. The calculator requires the policy term, the number of years the policy has been in force, the sum assured, the premium paid, and the bonus earned. Once you enter these details, the calculator will provide you with an estimated surrender value.
Factors Affecting LIC Surrender Value
There are several factors that can affect the surrender value of the policy, including:
- The policy term
- The number of premiums paid
- The sum assured
- The bonus earned
- The age of the policyholder
- The premium amount
- The type of policy
Advantages and Disadvantages of Surrendering LIC Policy
Before surrendering the LIC policy, it’s important to consider the advantages and disadvantages of doing so. Some of the advantages of surrendering the policy include:
- Getting immediate cash value
- Stopping further premium payments
- Relieving financial burden
On the other hand, some of the disadvantages of surrendering the policy include:
- Losing out on the sum assured
- Losing out on future bonuses
- Paying surrender charges
How to Surrender LIC Policy?
If you’ve decided to surrender your LIC policy, you can do so by following these steps:
- Visit the nearest LIC branch with your policy documents.
- Fill out the surrender form and sign it.
- Submit the form along with the policy documents.
- The LIC agent will verify the documents and process the surrender request.
The surrender value will be calculated based on the formula and you’ll receive the amount through a cheque or bank transfer.
FAQs on Surrender Value
What is the minimum period for which the policy should be in force to be eligible for surrender value?
Typically, the policy should be in force for at least three years to be eligible for surrender value.
How is the surrender value calculated for LIC Jeevan Saral policy?
The surrender value for LIC Jeevan Saral policy is calculated based on the number of premiums paid and the policy term.
Can the surrender value of LIC policy be used as collateral for a loan?
Yes, some banks and financial institutions accept LIC policy surrender value as collateral for a loan.
Is it advisable to surrender the LIC policy before maturity?
Surrendering the policy before maturity should be done only after considering all the pros and cons. It’s advisable to consult with a financial advisor before making a decision.
What are the surrender charges for LIC policy?
The surrender charges for LIC policy depend on the policy term and the number of premiums paid.
In conclusion, the surrender value is an important aspect of LIC policies that policyholders should be aware of.
The surrender value can be calculated using the formula or by referring to the surrender value chart or calculator.
Before surrendering the policy, it’s important to consider the advantages and disadvantages and consult with a financial advisor. The surrender value can be used as collateral for a loan, and surrender charges apply based on the policy term and the number of premiums paid.
LIC Surrender Value Calculator
Example To calculate Surrender Value
Suppose Mr. Sharma took a policy with a sum assured of Rs. 10,00,000 for a policy term of 20 years, and the premium payable term is 10 years. The annual premium payable by him is Rs. 50,000. He paid the premium for 6 years and then decided to surrender the policy. Let’s calculate the surrender value of his policy.
Step 1: Calculate the total number of premiums payable
Total number of premiums payable = Policy term / Premium payable term
Total number of premiums payable = 20 / 10
Total number of premiums payable = 2
Step 2: Calculate the total premiums paid
Total premiums paid = Annual premium payable * Number of premiums paid
Total premiums paid = 50,000 * 6
Total premiums paid = 3,00,000
Step 3: Calculate the surrender value
Surrender Value = (Number of premiums paid / Total number of premiums payable) * Total premiums paid + Bonus
Surrender Value = (6 / 2) * 3,00,000 + Bonus
Surrender Value = 18,00,000 + Bonus
From the above formula, it is clear that the surrender value of a policy depends on the number of premiums paid, the total number of premiums payable, the total premiums paid, and the bonus.
The bonus is declared by LIC and varies from year to year.
Is it advisable to surrender a policy early?
No,Surrendering a policy early can lead to a significant loss of money, so it is important to consider all the options before taking a decision.
Can I surrender my LIC policy online?
Yes, you can surrender your LIC policy online by visiting the LIC website and filling up the surrender form.