2024-08-27 16:28:47
It is learnt that insurance giant LIC has approached insurance regulator IRDAI seeking a review of the final surrender value guidelines to be issued in June 2024.
Insurance industry experts said these final guidelines are good for policyholders as it significantly increases the surrender value from 30% previously to over 70%.
According to sources, LIC has now proposed to reconsider the calculation method of surrender value. Now, all eyes are on whether IRDAI will agree to LIC’s request, especially when the guidelines will be implemented in a month.
Surrender Value
The surrender value in a life insurance policy is the amount of money the policyholder would receive even if the policyholder decides to terminate (surrender) the policy before it matures or a claim is made.
This value is usually a portion of the premiums paid, less any fees or charges, and is calculated based on how long the policy has been in effect and the amount of premiums paid.
Surrender value usually grows over time, meaning the longer you hold the policy, the higher the surrender value. However, surrendering the policy early during the policy term may result in a lower or even zero surrender value, as most policies have a lock-in period during which there is no surrender value.
Surrendering a policy means the policyholder forfeits the death benefit and the insurance coverage ends.
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