The surrender value factor is 0 for the first three years and keeps on increasing thereafter. Make sure to check the surrender value factor with your insurance advisor since it varies from company to company. The special surrender value is generally higher than the guaranteed surrender value. (Assured sum*(No of paid premiums/no of payable premiums)+bonus received) * surrender value factor The special surrender value depends on the assured sum, the number of premiums paid, the policy term, any bonus received, and the surrender value factor. The details and illustrations of guaranteed surrender value are generally mentioned with the policy details. It normally varies from 30-90% of the paid premiums. The payable percentage depends upon the number of years for which the insured has paid premiums before surrendering the policy. The total premium paid excludes the first-year premium and any rider premium. The guaranteed surrender value is a percentage of the total premiums paid till the time of surrendering the policy.

The payment usually is made as per the surrender value which is higher or as per the policies of the insurer.īelow are two types of surrender values that may be taken into account while calculating the due amount to be paid to the insured, when the policy is terminated before maturity. Two surrender values can be considered for paying the insured - t he guaranteed surrender value and the special surrender value.Upon surrendering the policy, you cannot avail of the tax benefits on premium payments anymore.An insurance plan can be terminated for cash, only after you have paid a regular premium for a specified time, generally 3 years.When you surrender a policy, the insurance component holds no more, and the dues are paid after deducting the surrender fees, which is charged by the insurance company on premature termination of insurance policies.

Surrender value is only available for policies that have an investment component such as unit-linked insurance plans, endowments plans, etc., and not on term plans or insurance-only plans.This is the accumulated component of the policy until the termination happens.įacts About the Surrender Value of a Policy When the insured exists from an insurance policy before its maturity, the insurance company may choose to pay a specific sum to the insured as per the terms of the policy, which is called as the surrender value of life insurance policy. There may be situations where the insured wishes to terminate the policy due to various reasons such as financial crunch, plans of investment with other policies, etc. Every insurance policy comes with a fixed tenure, during which the insured needs to pay the premium on a regular basis, as per the terms and conditions of the policy.

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