While many people buy LIC policies for life insurance, many people mistake LIC policies for savings and investments. Some paid the premium for a few years and then defaulted. Such policies shall be cancelled. Such policies may be surrendered if the premium is not paid to us. In this way, LIC company will refund the policyholder after calculating the surrender value of their policy. Stopping a life insurance policy before its maturity period and going for withdrawal is said to be surrendering the policy to the process. The surrender value of LIC policy is very less compared to its maturity amount and benefits.
When can the LIC policy be surrendered?
LIC's single premium plan policies can be surrendered in the second year if the premium is not paid.
In the case of limited-term premium plans, policies of 10 years or less can be surrendered after 2 years. Policies of more than 10 years can be surrendered after 3 years.
How to surrender the LIC policy?
Surrendering your LIC policy is not a good idea. However, in case of surrender, these documents should be prepared. These can be submitted to your LIC agent or LIC office. These are the documents required for surrender.
Original policy bond documents, request for surrender, surrender form, LIC Neft form, bank account details, original IT proof like an Aadhaar card, PAN card or driving license, and cancelled check leaf should be given. A letter should be given to LIC explaining why it is surrendering.
What is the surrender value of the LIC policy?
The Insurance Regulatory and Development Authority of India (IRDAI) has implemented new rules on surrender value of life policies from October 1. It is mandatory to provide accurate surrender value in every policy issued by life insurers. Also, the policy should not lapse if the next premium is not paid.
As per the new rule, the policyholder will have to repay more money even after paying only one year's premium for life insurance. Previous policy surrender or cancellation is not applicable for the first two years. From the third year onwards, the surrender value was nominally and unilaterally paid. But keeping in mind the interest of the policyholders, IRDAI has brought new regulations.
If the policy is terminated due to non-payment of premium after one year (lapse) you can get back up to 80-85% of the premium paid. For example, if you pay a monthly premium of Rs 10,000 (Rs 1,20,000 per annum), you will get back a little over one lakh as surrender value.
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