How To Surrender Your LIC Policy Online ?

Billions of Indians have access to a vast array of life insurance products through the Life Corporation of India (LIC), the country’s largest insurance provider. Each of these plans has a set tenure, allowing the policyholder to choose the length of time that best suits their needs. But in case the policyholder wishes to cancel for whatever reason before the chosen policy term, it can be done easily. You may undoubtedly give up the policy you purchased for the specified policy term. This procedure, known as “surrendering of policies,” is one that the policyholder can choose to do at any moment.

Read: How Do I Save Tax With a Life Insurance Policy?

What is the meaning of surrendering the LIC policy?

“Surrendering of LIC policy” refers to the act of ending a life insurance policy before the specified policy period has passed. When purchasing insurance from LIC, the policyholder chooses the length of the policy’s coverage. Once this time has passed, the policy matures, and the policyholder is entitled to all benefits and coverage under the terms and conditions. If the policyholder keeps the insurance for the entire term, this is how the LIC policy generally operates.

But when you choose to return or resign a LIC policy before its maturity date because you are unhappy with it, it is known as surrendering the policy. Additionally, the sum that the insured individual receives when surrendering a policy is typically referred to as the LIC policy surrender value. A LIC policy can only be given up under specific guidelines. Surrendering a policy would not be a prudent decision, though, as the surrender value would always be lower unless there was a serious problem with the policy.

The policyholder has the option to close the policy via the “surrender” option if they would like not to continue until the end of the policy term. The coverage ends, and the surrender value is paid by the LIC when the insurance is turned in.

What is the surrender value?

The sum owed to the policyholder upon policy discontinuation is known as the “surrender value.” It is only payable to the policyholder upon the fulfilment of three complete years of premium payments to the LIC, or as per the terms and circumstances of the specific policy. Any LIC policy’s surrender value is determined by the length of time the policyholder has owned the plan, paid premiums, and allowed the policy to expire.

When can you surrender your LIC policy?

Policyholders are given the option to surrender their policies to the LIC, but there are some restrictions that must be followed. No matter what, the policyholder is not allowed to give up the coverage. They can usually renounce the policy after a minimum of two or three years of purchase, depending on the kind of LIC insurance plan and the length of the premium payment term. Observe when the LIC policy can be resigned:

• Plans with a single premium: These allow policyholders to cancel their coverage after the second year of purchase if they are unable to pay the premium in full. Within the first year of purchase, the policyholder cannot return the policy.
• Limited/Regular Premium Plans: In both limited and regular premium plans, the policy duration is typically taken into account. For example, if the insurance period is under ten years, the surrender time is two years. If the insurance period is more than 10 years, the surrender time is three years.

Reasons to surrender the LIC policy

Policyholders may be required to surrender their LIC policy for various reasons, even though LIC is a well-known and reliable insurance provider in India. These are the few things that can compel you to give up your policy. The primary causes of insurance surrenders are:

• Lack of comprehension of the terms and conditions: The majority of those looking for insurance do not fully study the policy wordings at the time of purchase or do not comprehend its terms and conditions, which can lead to various issues down the road.
• Inadequate Coverage: You might have purchased a life insurance policy (LIC) believing that it would provide a plethora of benefits, but in reality, it hasn’t. It can’t, instead, satisfy your needs. Then it would not be a good idea to stick with that policy.
• Found a Better Plan: Following the purchase of a specialised LIC plan that can more comprehensively answer your individual demands, you may give up your prior policy if you have discovered a better plan that offers comparable benefits as well as extra facilities and advantages.
• Financial Problem: Although the main goal of the LIC plan is to provide you with financial relief, it may happen that you have encountered a particular financial crisis and that continuing with it has become difficult for you. To solve your financial crisis, you can surrender your LIC policy.
• Hidden Expense: Despite being uncommon, it is possible that you purchased your LIC policy from an intermediary and were not fully informed of all the fees and charges associated with it. If the plan looks pricey to you in that scenario, you are free to cancel it.
• Pre-existing Comparable Plan: It is best to preserve the most appropriate policy and give up the other if, after purchasing the policy, you discover that you already have a comparable form of insurance policy with almost identical advantages and facilities.

How to surrender the LIC policy ?

The LIC has not established any explicit policy standards pertaining to the surrender of LIC policy. Policyholders may be required to surrender their LIC policy for various reasons, even though LIC is a well-known and reliable insurance provider in India. These are the few things that can compel you to give up your policy.

The primary cause of insurance surrenders is a lack of comprehension of the terms and conditions. The majority of those looking for insurance do not fully study the policy wordings at the time of purchase or do not comprehend its terms and conditions, which can lead to various issues down the road. LIC has not established any rigorous guidelines for policy surrender; a LIC plan After paying premiums for a full two years, LIC can be given up at any moment. If you have a ULIP plan, you can cancel the policy at any point during the five-year lock-in period. You will be paid a certain amount as surrender value, as previously stated, based on the type of surrender and the nature of your insurance. The amount of time that the premiums have been paid, as well as the length of the policy on the surrender date, also affect the surrender value.

You can simply surrender your policy or ULIPs well in advance of the maturity date by going to the company’s website or LIC’s closest office location.

• Policyholders should visit the closest LIC branch office or log in on the company website.
• Then inform the Life Insurance Corporation about surrendering the LIC policy.
• For notification, you need to print the “Surrender Discharge Voucher” or LIC Form No. 5074. You can download it online.
• This form must be carefully filled out in order to discontinue the LIC insurance and withdraw the surrender value from your bank.
• Fill out the form and return it to the LIC with the required supporting documentation.
• In addition, you must provide the insurer with a letter explaining your reason for surrendering the policy. Either email or postal mail are acceptable methods of delivery.
• Sending any needed documentation for reference is also requested.
• Subsequently, the company will assess your surrender application.
• The procedure for giving up the coverage begins as soon as the company accepts the paperwork.
• When the formalities are deemed acceptable, the surrender value will be deposited into your designated bank account.

Documents required for surrendering the LIC policy

1. A copy of the original LIC policy
2. Form 5074, which may be found on the LIC website, should be printed off.
3. The bank of the registered policyholder cancelled one check.
4. Bank account details.
5. Form for Mandatory LIC NEFT
6. Application for surrender to LIC, handwritten and including a justification.

Conclusion

Although the Government of India directly owns LIC, one of the most reputable and trustworthy insurance organisations, it is best to consider all options and weigh the pros and cons of surrendering several times before making a final decision.