LIC of India 6185 views June 23, 2021

LIC Surrender Value Calculator

Life Insurance Corporation of India (LIC) offers numerous life insurance products that not only immune your dependents financially upon your unfortunate death but also help you earn on the premium you pay to it. However, due to lack of income for sustained periods can make you surrender the policy and receive the value that it would attain by that time. This is called surrender value which remains applicable to LIC policies having a savings component attached to them. These are mostly endowment plans where policyholders receive a surrender value on terminating the policy before maturity. But the key lies in knowing the amount of surrender value too. We will let you know the same using the LIC Surrender Value Calculator. So, let’s understand the functionality of the calculator, its implications and other stuff.

What is the LIC Surrender Value Calculator?

It’s an online tool that helps you estimate the surrender value by providing details such as –

  1. Name of the Policyholder
  2. Registered Mobile Number
  3. The Name of the Plan
  4. Policy Term
  5. Number of Premium Installment Paid
  6. Installment Premium Amount
  7. Premium Payment Mode
  8. Number of Completed Policy Years

The result flashed by the calculator is an approximate one and, therefore, the eventual amount might differ. The calculation can vary based on the type of surrender value too. We’ve discussed the same below. Take a look!

Types of Surrender Value

LIC policies come with two types of surrender value – Guaranteed Surrender Value and Special Surrender Value. The higher of the two is paid to you at the time of surrender. Let’s discuss these two types.

Guaranteed Surrender Value – It is the amount you are assured of getting by surrendering the policy once it attains the Surrender Value. The amount payable to you accounts for a certain percentage of the total premiums paid, However, the calculation does not account for the premium for the riders, if you have taken any of these. The percentage of total premiums paid might vary based on the policy term and the policy year of surrender. The rise in the policy term increases the surrender value factor. So, if the policy nears maturity, the surrender value factor percentage will be more. And if you have bought a participating life insurance plan of LIC, bonuses also come your way. So, in case of policy surrender, you will get the surrender value of accrued bonuses too.

Special Surrender Value – It’s a non-guaranteed payment that remains either equal or greater than the guaranteed surrender value. The Special Surrender Value will be based on the number of premium installments paid, policy term and accrued bonuses, if any. The formula to calculate the same is – [(Basic Sum Assured x Number of Paid Premiums/Number of Premiums Payable) + Accrued Bonuses] x applicable Surrender Value Factor. Let’s consider an example below.

Example Suppose you buy an endowment plan from LIC with a sum assured of INR 15 lakh and a policy term of 20 years. The annual premium for the same stands at INR 70,000. You paid the same for six years and surrendered the same in the 7th year. If the bonus accrued is INR 40,000 and the surrender value factor is 35%, how much value will you get on terminating the policy? Let’s calculate! 

[(15,00,000 x 6/20) +40,000] x 35%=INR 1,71,500

When Does the LIC Policy Attain a Surrender Value?

The LIC policy attains a surrender value once you pay the premium without fail for at least 2-3 years.

Can You Get a Loan Based on the Surrender Value of LIC?

Yes, you can get a loan once the LIC policy attains a surrender value. The loan amount could be around 70-85% of the surrender value and the interest rate on it remains lower than that of unsecured loans.

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