How To Surrender LIC Policy Before Maturity | Discontinue LIC Policy
How To Surrender LIC Policy Before Maturity
Many times you follow the advised of agents and purchased the policy without knowing its complete features and benefits but after some time the reality comes in front you and you feel that this policy is worthless. So you can surrender your policy but do you know How to Surrender LIC Policy before Maturity? We have provided the best way of Discontinue LIC Policy, so you can get rid of your policy.
It is most important to know all the facts about the insurance policy before buying it. Everything possesses two sides if it consists benefits, then it also have some disadvantages. The customer needs to check all the services as well as the terms and conditions before accepting any proposal. If you are not satisfied with your decision, then you can surrender your LIC policy.
How To Surrender LIC Policy
We would like to tell you that the online Surrendering LIC policy is not possible. You can only surrender your policy at your LIC policy branch. Only that branch will accept your application from where you purchased the policy. Other branches will not accept your application form because you’re all documents like as proposal forms, loan details and other details possess only your serving branch.
Documents Required For Surrender LIC Policy
- Original Policy Bond
- LIC Policy Surrender Form No.5074
- Bank passbook
- Driving License or PAN Card
- Id proof
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Types Of Surrender Policy
There are two types of surrender policy first one is Guaranteed Surrender Value and another one is Special surrender value. We are presenting the details of both. Look at below;
Guaranteed Surrender Value
User has to pay premiums at least three years then he becomes accountable to surrender the policy. If the user has paid certain percentage of the premiums of total amount then he can surrender the policy. The surrendering value is mentioned in the policy bond. You have to pay the premiums at least 3 years. The surrender value is depends on the policy terms and amount of premiums.
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Assume deepanshu purchased a LIC policy and his yearly premium is Rs.1 Lakh, now he needs to pay for 3 years.
Total Premium Paid= Rs.3 lakh
Premium excluding first year=Rs.2 lakh
As we know that Guaranteed Surrender Value will be 30% of the Premiums Paid except first year premiums.
Now the calculate 30% of 2,00,000 i.e. 60,000. That means he will acquire 60,000.
Note – Above presented value is not be added with accumulated bonus.
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Special Surrender Value
Such a value which is a total value i.e. percentage of paid up value including bonus. This value is depends on the type of policy, time to maturity of policy, completion years of policy etc. all insurance companies do not mentioned the surrender value in their brochures. In the starting years of the policy this value is zero but afterward increases.
We can also say that Special Surrender Value is the percentage of total paid up value. We are presented the complete calculation process.
Special Surrender Value= (Sum Assured x (No. of premiums paid/No. of premiums payable) + total bonus received) x surrender value factor
We can also say special Surrender Value=Total Paid up Value x Surrender Value Factor
You can calculate your Surrender Value Factor with the help of the above presented formula and your surrender value is change on the basis of term of the policy.
Paid Up Value and Total Paid Up Value
If the user has been paid his premiums for minimum three consecutive years and any following premium has not been paid within the grace period then that failed policies are known as Paid Up policies
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Assume Sheetal has taken the life insurance policy of 4 lakh and she decided that, she will pay her monthly premiums for 20 years. Suppose he paid her premiums for 10 years after that she discontinues her policy. This is known as paid up policy. You can calculate it, with the help of the presented formula.
Paid Up Value= (No. of Premiums Paid/No. of Premiums Payable) x Sum Assured
Paid Up Value= (10/20) x Rs.4 lakh=Rs.2,00,000
For the 11th year, her policy will continue with the amount of Rs.2,00,000 in place of 4,00,000. Bonus will also add up with this amount then this value is known as Total Paid up Value
Total paid up value = Paid up Value+ Accrued Bonus
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Surrender of LIC insurance policy means that you are taking an exit from the insurance plan before maturity. An amount which is obtained by the user after surrendering is called Surrender Value. Generally, you can surrender your policy after paying your premiums at least 3 years. If you surrender your policy before maturity period, then in this case you can lose the Tax Benefits under Section 80C because the contract between the insurance company and user is over. If a policyholder decides to terminate the policy before maturity, the amount which the insurance company will pay to the policyholder is known as surrender value.