How To Surrender LIC Policy in 2022
How To Surrender LIC Policy

How To Surrender LIC Policy in 2022

If you surrender your LIC policy before the maturity date, you will have to pay the surrender charges. The charges may vary depending on the type of insurance policy, premium paid, and the total premium paying term. 

When Can You Surrender Your LIC Policy

The minimum period of surrendering any policy depends on the term of the policy and the premium paying term. The usual minimum period to surrender LIC policy is as follows –

#1. Under Single Premium Plan

In this plan, you can surrender the policy during the second year itself. However, you cannot surrender the policy in the first year after purchase.

#2. Under Limited Premium and Regular Premium Plans 

For 10 years or below policy term, the duration is two years. Surrender can be done from the third year onwards.

For above 10 years policy tenure, the minimum duration is 3 years. The policy can be surrendered from the fourth policy year. 

Also read – How to check LIC policy number

2 Options to Surrender LIC Policy

#1. Guaranteed Surrender Value (GSV)

Guaranteed surrender value is the guaranteed amount of money that will be paid to the policyholder upon surrendering a life insurance policy. The amount is payable after the completion of 3 years. GSV is usually 30% of the premiums paid, excluding the first-year premium.

It’s important to note that the GSV does not include any additional premiums paid for riders, taxes or any bonus that you may have received from the life insurance company.

For example, if your yearly premium is Rs. 2 Lakh and you paid it for 4 years.

Total Premium Paid – Rs. 8 lakh.

Premium excluding 1st year – Rs. 6 lakh.

Guaranteed Surrender Value – 30% of the Premiums Paid (excluding 1st year premium). 

Hence, 30% of Rs. 6,00,000 will be Rs. 180,000 is what you get.

Also remember, this Guaranteed Surrender Value will not add the already accrued bonus.

Also read – LIC Bonus Rates in 2022

#2. Special Surrender Value (SSV)

Special Surrender Value = Total Paid Up Value * Surrender Value Factor.

To understand the special surrender value, first you know about the Paid-up Value. 

Total Paid Up Value = [{(Number of premiums paid/Number of premiums payable) * Sum Assured} + Accrued bonus] 

Paid up Policy – If the policyholder stops paying premium after three consecutive years and any subsequent premium has not been paid within the grace period, then policy is lapsed. Such lapsed policy is considered a Paid Up Policy. But the policy is continued with a lower sum assured. 

Surrender Value Factor changes based on the factors like types of policy, term of the policy, philosophy of customer, and fund performance in the particular policy. Usually, this value is zero for the first 3 years. SSV factor increases with time. If the policy is surrendered in later policy years, the SSV factor would be higher and vice-versa.

For example,  A policy tenure is 20 years and the sum assured is Rs.10 lakh. If premiums are paid for 10 years. After that, you discontinue the policy and the supposed bonus accumulated is Rs. 1,00,000. Such a discontinued policy is called a paid up policy.

Paid Up Value = (No. of Premiums Paid/No. of Premiums Payable) * Sum Assured.

Paid Up Value = (10/20) * Rs.10 lakh = Rs. 5,00,000.

Total Paid Up Value = Paid Up Value + Accrued bonus

Total Paid Up Value = Rs. 5,00,000 + Rs. 1,00,000 = Rs. 6,00,000

Special Surrender Value = Total Paid Up Value * Surrender Value Factor.

Special Surrender Value = Rs. 6,00,000 * 40% (assumed) = Rs. 2,40,000

Alternatively, you can also use the surrender value calculator to calculate the exact surrender value in minutes with the help of an effective online calculator. that you can Google.

Check out – LIC agent’s commission rates in 2022

How to Surrender LIC Policy Before Lock-in Period

First, you should keep in mind that online Surrendering your LIC policy is not possible. To surrender your LIC policy, you need to visit your LIC servicing branch where your LIC policy was registered. Because of your policy documents like proposal forms, loan details and all other records will be available at the servicing branch only.  

The policyholder must take the following steps to surrender the LIC policy before maturity.

  • LIC policyholders can surrender the policy by filling up a ‘surrender request form no. 5074’ and submitting it to the nearest LIC servicing branch.
  • The form can be downloaded from the LIC website or can be obtained from the LIC branch. 
  • The policyholder needs to submit the original policy document, ID proof, cancelled cheque, and bank account statement of the policy holder.
  • The surrender request will be processed after verification of the documents submitted by the policyholder.
  • If the surrender request is accepted, the policyholder will receive the surrender value in the bank account mentioned by the policyholder.
  • This process usually takes 4 to 5 working days. 
  • Instead of visiting LIC branch office, the policyholder can also courier the surrender discharge form along with the required documents to LIC’s head office. The address is Yogakshema Building, Jeevan Bima Marg, P.O. Box No – 19953, Mumbai – 400 021

Documents Required for Surrender LIC Policy

  • Original policy bond document.
  • Physical copy of LIC Policy Surrender Form No.5074. 
  • A cancelled cheque or bank account statement of the policy holder 
  • Original ID proof like Aadhar card, pan card or driving license
  • LIC’s NEFT Form (if you are not using the above mentioned Surrender Form).

Check out – LIC Jeevan Shanti Review


It is important to understand the surrender value of a LIC policy before making any decisions. If you have any questions or concerns regarding surrendering your LIC policy, let me know in the comment box.  

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