LIC Surrender Value Calculator

⚙️ How to Calculate LIC Surrender Value

The surrender value of an LIC policy is calculated in two ways: Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV). The policyholder is entitled to whichever amount is higher.

1. Guaranteed Surrender Value (GSV)

This is a straightforward calculation. A policy acquires a GSV only after at least two full years' premiums have been paid. The formula is:

GSV = (Total Premiums Paid × GSV Factor for Premiums) + (Accrued Bonuses × GSV Factor for Bonuses)

For simplicity and as a common rule of thumb (especially for older policies), it's often estimated as 30% of total premiums paid, excluding the first-year premium and any extra premiums for riders. Our calculator uses the more modern factor-based approach for a better estimate.

2. Special Surrender Value (SSV)

This is the more common and generally higher value paid by LIC. It is determined by the company's performance and market conditions. The formula is:

SSV = (Paid-up Value + Accrued Bonus) × Special Surrender Value Factor

• Paid-up Value: This is the reduced sum assured if you stop paying premiums. It's calculated as:
  (Original Sum Assured) × (No. of Premiums Paid / Total No. of Premiums Payable)
• Special Surrender Value (SV) Factor: This is a dynamic percentage determined by LIC. It depends on the policy term and the number of years the policy has been in force. It generally increases as the policy nears maturity. Our calculator uses a standard, representative SV Factor chart for estimation.

Important: The final SSV can only be confirmed by LIC. This calculator provides a reliable estimate based on these standard formulas.

❓ FAQs and Important Information

How does this calculator work for specific policies?

• LIC Surrender Value Calculator Jeevan Anand: Jeevan Anand is an endowment + whole life plan. The calculation principle is the same, involving paid-up value and bonuses. The SV factors for this plan might be specific.
• LIC Surrender Value Calculator Jeevan Labh: As a limited premium endowment plan, the number of premiums payable is less than the policy term. Our calculator's inputs for "Policy Term" and "Number of Premiums Paid" correctly handle this structure.
• LIC Surrender Value Calculator for Money Back Policy: For these policies, you must subtract any survival benefits (money back payments) already received from the premiums paid when calculating the surrender value. Our calculator does not automatically do this, so you should adjust the "Total Premium Amount Paid" input accordingly for an accurate estimate.

When can I surrender my LIC policy?

Generally, a policy can be surrendered after it has been in force for at least two consecutive years (for policies issued after April 1, 2020). For policies issued before this date, the lock-in period was typically three years. Our LIC surrender value calculator after 3 years and after 5 years can help you see how the value grows over time.

What is the tax on LIC surrender value?

The tax on LIC surrender value is an important consideration. As per Section 10(10D) of the Income Tax Act:

• The surrender value is tax-free if the premium paid in any year does not exceed 10% of the sum assured (for policies issued after April 1, 2012).
• If the surrender value is taxable, it is added to your income for the year and taxed as per your income tax slab. Additionally, TDS (Tax Deducted at Source) of 5% is deducted by LIC if the amount exceeds ₹1,00,000.

What is the process to surrender a policy?

You need to visit the servicing LIC branch and submit the following:

1. The original policy bond document.
2. A completed LIC Surrender Value Form (Form 5074).
3. A copy of your PAN card and Aadhaar card (for KYC).
4. A canceled cheque or bank passbook copy for direct credit.