Know the process to Calculate LIC Surrender Value – All the Banks, Private or Public Sector are providing the loan against the Life Insurance policies. The LIC or any other policies can also be used as additional collateral for any type of loans like Home Loan, Personal Loan, MSME or Mortgage. Loans are extended after assigning the policies in favor of the lender. The value of the assigned policy is known through the surrender value.
What is Surrender Value ?
The total amount which an investor received from the life insurance company if he decides to exit the policy before maturity. First of all before taking the new Policy one should assure that the Policy have had features of Surrender value. There are many Life Insurance policies which doesn’t have Surrender value features or Endowment policies which are very complicated to understand.
Surrender Value Eligibility ?
In General, If Policy holder has paid the regular premium continuously for three years against the Policy then such policies can be used for calculating surrender value. One can freeze his premium paying after the end of three years and convert it in to paid up one.
As per the latest guidelines by IRDA, none of the life insurance companies have been asked to levy surrender charges if the policyholder chooses to terminate the cover after five years. It means the surrender value of the policy after 5 years will be higher.
There are two types of surrender value :
a) Guaranteed Surrender Value and
b) Special/cash surrender value.
While the guaranteed value is easy to calculate and is mentioned in the product brochure and the policy bond, The Special Surrender Value only after the policyholder puts in the surrender request.
How To Calculate the Surrender Value ?
Life Insurance of India (LIC) policy holder can get the surrender value of their life insurance policy online following the below steps :
1. First of All Register Your self after visiting licindia.in as a new user
2. Login to your account and click “Enrol Policies” in the left menu.
3. Visit “Click to Enrol New policies” and click “Proceed”
4. Enter your policy number along with premium paid and “Enrol your policy”
5. After enrolling the policy, check “View Enrolled policies
6. Check “Click for details” under “Loan and Bonus” Tab
7. The in built application will show you the Surrender value.
How To Know the Surrender Value via Customer Care ?
1. Dial LIC Customer Care at 022-6827-6827 with your registered number with the policy.
2. Enter your Policy Number & Date of Birth in DDMMYYYY.
3. Go to the Loan Menu.
4. Auto response from the IVR, mentioning the Eligible amount for Loan.
5. The eligible amount is the ‘Surrender Value’.
6. An easiest way to know the surrender value.
Surrender Value Calculator ?
For Calculating the Life Insurance surrender value, the very first thing is to calculate the Paid Up Value of the Investment Policy. Paid value is calculated to compare whether the Policy should surrender or not.
LIC Surrender Value Calculator Formula :
Know the formulae of LIC Surrender Value Calculator
PAID UP VALUE = [No of Premium Paid(Yearly) * Sum Assured/Policy Term] + [Bonus * Sum Assured/1000]
SURRENDER VALUE = [Surrender value factor * Paid up value /100]
LOAN VALUE = (% Of Loan Eligibility)*SURRENDER VALUE (Loan Eligibility may varies bank to bank like 85%, 90% etc)
Note : Bonus can be extract from the Companies bonus chart . Surrender Value Factor also can be taken from the chart.
LIC Bonus Chart can be Viewed : Here
Example : M/S AskBanking takes an endowment policy of 25 years on 01/01/1980 for sum assured of Rs. 1 lakh and has paid all the premiums up to till 31/12/1999 i.e. for 20 years. Now, he would want to know how much loan he can get?
SOLUTION : For Obtaining the Loan Eligibility We need to find out the PAID UP Value and Surrender Value. According to the details we can calculate :
PAID UP VALUE = [20*100000/25]+[1321*100000/1000] * Bonus is taken from the chart Endowment policy of 20 Years
The Value comes around : 2,12,000
Calculate Surrender Value = 65.49*212100/100 = 1,38,904
Therefore LOAN VALUE = 90% * Surrender Value i.e. 138904 =1,25,013
NOTE : for lapsed policy, the loan allowed is 85%. The minimum surrender value is 30% of total amount of premiums paid excluding the premiums paid for the first year for any Endowment policy.