How To Calculate Surrender Value of LIC Policy Jeevan Anand

How To Calculate Surrender Value of LIC Policy Jeevan Anand

According to the policy documents the surrender value of LIC policies is defined as

  Guaranteed surrender value of LIC Jeevan Anand:
 “After 3 years of active policy, Minimum 30% of all the premiums excluding first year premium and also if there is any bonus vested for the policy.. Also if any extra premium is paid towards Accident benefit, it will also be excluded.”

  LIC’s Money back policy (with profit): 
"Guaranteed surrender value is 30% of the basic premium paid excluding the first years payment and all survival benefits paid earlier"

 In all of the the LIC Policies the catch lies in bonus value.

 LIC Bonuses are not cash values but they are additional cover values, which the beneficiary get in case of death or paid to you in cash at the end of the tenure. So the bonuses which are reversionary i.e. declared today but paid at the end are not to be understood in the usual sense of bonus, which is a cash amount available/paid immediately.

i.e: At times of surrender you will only get today's value of final bonus

LIC Jeevan Anand Surrender Value Calculation Formula:

PAID up Value = [No of years premium paid * S.A /Policy Term] + [Bonus * S.A/1000] ( The first year premium is excluded in this case)
SPECIAL SURRENDER VALUE = Surrender value factor * Paid up value /100 

Or
Special Surrender value = {Basic Sum Assured X (Number of Premiums Paid/Total Number of Premiums Payable) plus total bonus received}X Surrender Value Factor.

LIC Jeevan Anand Surrender Value Calculation Example:

 Let us suppose Policy Started in 2007
 Sum Assured: 3,00,000
Yearly premium: 15,916
 Bonus accumulated till now: 67,200
Policy Term: 20 Yrs.
Premiums Paid so far : 5
Surrender Value: 30% *(5*15,916) + Final Bonus in today's term
so the surrender value in this case will be Rs 43,453 

LIC Endowment Policy Surrender Value

As an approximate benchmark in a 20 yr endowment plan after 3 yrs we get @1 premium back, after 5 yrs @2.5 premium , after 12 yrs @12 premium back and then after that surrender value is more than the premiums paid and so on

Should I Surrender My LIC Policy?

Ideally You should make your policy "Paid Up" i.e stop making any more payments but keep your policy in force till maturity instead of surrendering the policy. This will give you cover of number of years policy has been in force (i.e 5/20 or 25% of 3,00,000 = 75,000 in our case) + Bonus accumulated so far i.e 67,200 at maturity. So on making this policy paid up you will get 142,200 on maturity  for investing Rs 79,200 or you can get out at a loss by Taking Rs 45,000 now.