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Having a LIC policy is a good way to save money for the future, but sometimes life changes, and you might need to end the policy before it matures. If you are thinking about surrendering your LIC policy in 2025, it is important to know the right steps to do it smoothly.
In this blog, we will guide you through the updated process, what you need to do, and eligibility, so that you can make the best decision for your situation.
What is Surrendering of LIC Policy?
When you decide to end your policy before it ends, it is known as surrendering an LIC policy. When you do this, you stop the policy, and you will lose any future benefits like life cover or the full money you would get when the policy matures. After surrendering, the life cover stops right away, and you cannot start the policy again.
Surrendering is usually not a good idea because the money you get back (called the surrender value) is much less than what you would get if the policy until the end. This applies to many types of LIC plans, endowment, whole life, and sometimes even term insurance, which depends on LIC rules.
When Can You Surrender a LIC Policy?
If you want to stop your LIC policy early, you can surrender it. But LIC has some rules you need to follow before you can surrender the policy. So, you can surrender your policy in these cases:
- Single premium plans: You can surrender after 1 year (in the 2nd year).
- Limited or regular premium plans:
- If your policy is for 10 years or less, you can surrender after 2 years.
- If your policy is for more than 10 years, you can surrender after 3 years.
What is the Surrender Value?
The surrender value is the money you get if you decide to stop your LIC policy before it ends. This amount depends on things like how much you have paid, how long you have had the policy, bonuses added, and some charges that may be cut.
It is the final amount you will receive when you give up your policy early. Many people think about closing their policy when their money plans change, so it is important to understand the surrender value before making a decision.
Types of Surrender in LIC Policy
Here are some types of LIC policy surrender:
- Full Surrender This means you completely stop your policy on your own. You would not have to pay any more premiums, but you would also not get any future benefits or life cover. LIC will give you some money back, which is usually a part of the total amount you paid, after cutting some charges.
- Special Surrender This happens in special cases, like if someone is going through serious financial problems or health issues. LIC may allow a person to surrender the policy with fewer charges or give a better amount than usual.
- Surrender Due to Non-Payment of Premiums If you stop paying your premiums and do not restart the policy during the grace period, LIC will treat the policy as surrendered.
- If your policy has a surrender value, you will get some money as per the rules.
- If it does not have a surrender value, you would not get anything back.
How to Surrender a LIC Policy Online?
Follow these simple steps to close your LIC policy early through the online process:
1 Online Process:
- Step 1: Go to the official LIC website and log in with your user ID and password.
- Step 2: Download the Surrender Form (called LIC Form No. 5074).
- Step 3: Fill the form carefully with the correct details.
- Step 4: Submit the form with required documents (like ID proof and policy papers).
- Step 5: Once LIC checks and accepts everything, your surrender process will begin.
- Step 6: After this, you will receive the surrender amount in your bank account linked to LIC.
2 Offline Process:
- Step 1: Go to your nearest LIC branch and ask for Form 5074 (this is the surrender form).
- Step 2: Fill out the form and attach the required documents (like ID proof, policy papers, and bank details).
- Step 3: Now you need to submit everything to the LIC office.
- Step 4: LIC will check your request and start the surrender process.
- Step 5: Once it gets approved, the money (surrender value) will be sent to your bank account.
How to Calculate the Guaranteed Surrender Value (GSV)?
You can find the Guaranteed Surrender Value using this simple formula:
GSV = (GSV Factor × Total Premiums eligible for GSV) + (GSV Factor × Bonuses if any)
Let’s understand this with an example:
Rita bought an LIC Endowment Plan with a sum assured of Rs. 50 lakhs for 15 years. She pays Rs. 1,80,000 every year and has paid premiums for 8 years. After some time, Rita decided to surrender her policy because she needed money for her child’s education. The GSV factor for the 9th year is 25%, and she has earned a bonus of Rs. 30,000 so far.
Now, let’s calculate the GSV:
- GSV factor = 25%
- Total premiums paid = Rs. 1,80,000 × 8 = Rs. 14,40,000
- Bonuses = Rs. 30,000
Using the formula:
- GSV = (25% × 14,40,000) + (25% × 30,000)
- = 3,60,000 + 7,500
- = Rs. 3,67,500
So, Rita will get Rs. 3,67,500 as her Guaranteed Surrender Value.
How to Check LIC Policy Surrender Status Online
To check the surrender status, follow these simple steps to check it online:
- Step 1: Go to the official LIC website.
- Step 2: Log in to your account using your user ID and password. If you do not have an account, click on ‘register’ to create one.
- Step 3: On the left side of the homepage, click on ‘Enrol Policies’.
- Step 4: Click on ‘Click to Enrol New Policies’ and then click ‘Proceed’.
- Step 5: Fill in the details like your policy number, your name, and the premium amount. Then click on ‘Enrol your policy’.
- Step 6: Look for the ‘Loan and Bonus’ section, and click on ‘Click for details’ next to your policy.
- Step 7: You will see information about your loan options and your surrender value there.
What Happens After Your Surrender Your LIC Policy?
If you choose to stop your LIC policy, here is what you can expect next:
- Policy Stops Right Away: As soon as you surrender the policy, your life cover and protection end immediately.
- You Cannot Start It Again: Once the policy is surrendered, you cannot restart it later. So, make sure you are fully sure before taking this step.
- No More Benefits: You will lose any extra benefits, like bonuses or future payout. You will not get anything else from the policy.
- You will get the Surrender Amount: LIC will send you the surrender value. This is the amount you get for closing the policy early. The amount depends on how long you have paid premiums and other policy rules.
Things to Consider Before Surrendering Your LIC Policy
Stopping your LIC policy is a big financial decision. Before you go ahead, think about these points:
- You will lose Life Cover: Once you surrender the policy, your life insurance ends. Your family will not get any money if something happens to you.
- You Might Get Less Money: LIC policies are made for long-term savings. If you stop early, the amount you get back may be much lower than what you would get at the end.
- Check Other Options First: Instead of giving up the policy, you can try other ways, such as reducing the cover or taking a loan against the policy.
- Think About Your Family's Safety: If this policy were for your family's future security, surrendering your policy is not a good idea.
Conclusion
Surrendering your LIC policy is a big step and can be confusing if you do not fully understand the good and bad sides of it. The main goal is to make sure you do not lose long-term benefits just to get some quick money now.
If you are unsure, remember that there are other options that might suit your needs better. It is always a good idea to talk to an expert who can guide you and help you choose the best plan for your situation.
FAQs
If you surrender your LIC policy early, your policy will stop. You cannot get any life cover or future benefits. LIC will give you a surrender value, which is a part of the money you have already paid.
LIC usually takes 7 to 10 working days to process the surrender request and send the money to your bank account after all documents are submitted correctly.
Yes, you can surrender your LIC policy online. You need to log in to the LIC website, download Form 5074, fill it out, and submit it with the required documents either through the portal (if allowed) or by sending them to the LIC branch or head office.
No, you will only get the surrender value, which is usually less than the total premiums you paid. You may also lose any bonus or benefits.
No, once you surrender the policy, it cannot get started. The decision is final.
Yes, if your policy is eligible, you can take a loan against it. This way, you get money without losing your life cover or future benefits.
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