LIC Surrender Value Calculator | Plan Your Policy

What is an LIC Surrender Value Calculator?

The surrender Value of a LIC is the amount you will receive if you decide to stop, cancel or surrender the policy before the maturity dates. The Surrender Value depends on a variety of factors, for example, the total duration of the policy, how many premiums are paid, the type of policy, and any other additional factors for individual policies.

An LIC surrender Value Calculator is used to calculate the Surrender value of an LIC policy.

Surrender Value of an LIC Policy:

What is the Surrender Value of a Policy?

Surrender Value of a policy is the amount that you will receive, if you decide to stop, cancel or surrender a policy.

Eligibility:

You can only surrender an LIC policy after paying premiums for at least three full years, or you will not get any surrender amount, and all your premiums will be wasted.

How much Will you get as Surrender Amount?

There are two cases:

• After three years, you'll receive at least 30% of your total premiums, excluding the first year's premium and any premiums paid for add-on benefits or riders.
• After a long period (only 1-2 years left to mature) - The surrender value increases the longer you hold the policy. It can go as high as 90% of the maturity amount, depending on the specific policy and how long you've had it (but it will never be equal to the maturity amount).

Things you need to consider before surrendering

• Generally low payout: If you surrender your policy in the initial years, the surrender value will be much lower than the total premiums you've paid. Even if you surrender after an extended period, it will still be less than what you should have gotten if you had completed the policy.
• You cannot Restart your policy: Once you surrender it, you cannot start the surrendered policy again. If you want to start the policy, you have to restart from the beginning.
• Consider a loan against your LIC policies: If you need money, LIC offers you loans against your policy. This might be better than surrendering, as your insurance stays intact, and you can repay the loan later.

How LIC Surrender Value is Calculated?

Here is How the LIC Surrender Value calculator works-

Input Values:

You have to provide the following details, like:

• Policy Start Year- The year in which you have started your LIC Policy
• Policy Term (Years)- The duration of your LIC Policy
• Premium Payment Type- Denotes the way you pay your Premium (Regular pay, single pay, and Limited Pay)
• Last Premium Payment Year- The year in which you last paid your Premium for your policy
• Sum Assured (₹)- The maturity Amount that LIC has promised you.
• Annual Premium (₹) - The total Annual Premium that you pay for the policy
• Accrued Bonus (₹) - If you have received any money from the policy before the maturity

Output:

• Surrender Value- The amount you will receive when you surrender your policy.
• Premium Paid Till Date- The total Premium that you have paid till now for your policy
• Future Premiums Payable (if continued)- If you want to continue paying all the premiums for your policy, then the total amount that you have to pay

Formula to calculate the LIC Surrender Value

This is How Surrender Value is Calculated:

Surrender Value = [(total years premium has been paid / total duration of the policy in years) x Total Maturity value / sum assured + Accrued Bonus] x Surrender Value Factor (SVF)

Understanding the Surrender Value Factor (SVF)

The Surrender Value Factor (SVF) determines how much of the policy's Value is paid when it is terminated or surrendered early. The factor increases with the premiums paid over the years, providing greater returns for longer policy tenure.

Once a significant portion of premiums is paid, the factor stabilizes at 90% of the policy's assured Value/Maturity value and Accrued bonuses.

Advantages of Using an LIC Surrender Value Calculator

• An LIC surrender value calculator estimates how much you might get if you surrender your policy.
• Knowing the surrender value can help you decide whether surrendering your policy is the right option for your current financial situation.
• If the calculator shows a low surrender value, you might consider alternatives, such as a loan against your policy's value.
• The calculator is easy to use, and it doesn't only require a little financial knowledge to use it.

Steps to use the LIC Surrender Value Calculator

Using the LIC Surrender Value Calculator is a straightforward process. Here's a breakdown of the typical steps involved:

• Input Policy Start Year: Enter The year in which you have started your LIC Policy
• Input Policy Term (Years): Enter The duration of your LIC Policy
• Input Premium Payment Type: Enter the way you pay your Premium (Regular pay, single pay, and Limited Pay)
• Input Last Premium Payment Year: Enter The year in which you last paid your Premium for your policy
• Click Next for inserting the next set of Inputs
• Input Sum Assured (₹): Enter The maturity Amount that LIC has promised you.
• Input Annual Premium (₹): Enter The total Annual Premium that you pay for the policy
• Input Accrued Bonus (₹): Enter If you have received any money from the policy before the maturity
• Click on the Calculate Button

Output:

The calculator will display the following results:

• Surrender Value- The amount you will receive when you surrender your policy.
• Premium Paid Till Date- The total Premium that you have paid till now for your policy
• Future Premiums Payable (if continued)- If you want to continue paying all the premiums for your policy, then the total amount that you have to pay

Common Mistakes to Avoid While Using the LIC Surrender Value Calculator

To ensure the accuracy of your calculations, avoid these common pitfalls:

• Inaccurate Values: Double-check all the inputs you are providing to get the proper output.