The surrender value of a life insurance policy is the amount the insurer pays you when you decide to terminate the policy before it matures. It is calculated with the help of your policy’s surrender value factor. This factor is determined by the number of premiums you have paid and the length of the policy. The surrender value can be estimated by multiplying the surrender value factor with the total premiums paid till date.
The surrender value of a life insurance policy is the amount the insurer will pay to the policyholder if they decide to terminate the policy before it matures. It is calculated by subtracting any surrender charges from the cash value of the policy. The amount of surrender value you can receive on your life insurance policy after 10 years will depend on several factors, including the type of policy, your age and health, the length of the policy term, and the surrender charges associated with it.
The surrender value of a life insurance policy is the amount the insurer will pay to the policyholder if they decide to terminate the policy before it matures. It is calculated by subtracting any surrender charges from the cash value of the policy. The amount of surrender value you can receive on your life insurance policy after 10 years will depend on several factors, including the type of policy, your age and health, the length of the policy term, and the surrender charges associated with it.
Guaranteed Surrender Value is equal to – (total premium paid multiplied by the guaranteed surrender value factor) plus (bonus multiplied by surrender value factor for bonus).
Special Surrender Value is equal to – (Original sum assured multiplied by (number of premiums paid / number of premium payable) + total bonus received) * surrender value factor
You will find all the above information in the brochure or the policy document. All you have to do is place the numbers in these formulae.
Sample Illustration using LIC Surrender Value After 10 Years Calculator
Let us assume that you bought LIC’s New Jeevan Anand policy. Here are your requirements –
Policy term – 20 years
Sum assured – Rs. 10,00,000
Using the LIC Premium & Maturity Calculator, annual premium – Rs. 54,869
Bonus Rate – Rs. 50 per Rs. 1000 of sum assured
Now you decide to surrender the policy in the 11th year. Therefore –
Total premiums paid is equal to Rs. 5,48,690.
Total bonus accrued = ((50 x 10,00,000/1,000) x 10) which equals Rs. 5,00,000.
The guaranteed surrender value factor for a policy term of 20 years and policy surrender in the 11th year is 60% (as mentioned in LIC New Jeevan Anand’s brochure).
The guaranteed surrender value factor for bonuses is 18.6%.
Putting the above data in the formula for calculating the LIC guaranteed Surrender Value after 10 Years, we get (5,48,690 multiplied by 60%) plus (5,00,000 multiplied by 18.6%) which is equal to Rs. 4,22,214.
This is the LIC surrender value you will receive if you surrender your policy after 10 years.
While this LIC surrender value after 10 years calculator shows an overall estimate of the amount you will receive, you should know that there are several charges that are excluded by LIC. Also remember that the bonus rate is never constant. So you should check with LIC’s customer support to keep updated.
