Request a current written surrender quotation and paid-up benefit statement from the insurer, then compare what you receive today with the cover and contractual benefits you give up. Do not decide from total premiums paid alone.
Start with an official current quotation
The policy document may describe how surrender value is determined, but the amount available on a particular date can depend on the product terms, premiums paid, policy duration, bonuses, loans and other policy-specific information.
Ask the insurer for a dated written quotation instead of estimating from an online example.
Request these figures together
- current surrender value;
- any deductions or outstanding policy loan;
- paid-up benefits if you stop premiums without surrendering;
- death benefit under paid-up status;
- maturity benefit under paid-up status;
- revival terms if the policy has lapsed;
- next premium and remaining premium-paying term; and
- current nominee and assignment status.
Compare alternatives, not just one number
Surrender, making the policy paid-up, reviving it and continuing premiums can create different cash flows and insurance outcomes. A useful comparison needs the dates and amounts under each available option.
The right comparison is not simply “premiums paid versus surrender value”. Premiums may have funded insurance cover during earlier years, and surrender may remove future cover and contractual benefits.
Check replacement risk
If you are considering surrender because another policy has been proposed, examine the new policy independently. A replacement may involve fresh underwriting, new exclusions or waiting conditions, a new commission structure and a different guarantee profile.
Do not cancel existing cover until you understand whether replacement cover has actually commenced and whether it meets your needs.
Separate tax from policy value
Tax consequences can depend on the policy type, issue date, premium-to-sum-assured relationship, benefits, applicable law and your circumstances. Obtain current advice from a qualified tax professional instead of relying on a generic rule remembered from another policy.
Questions a useful analysis should answer
- What cash do I receive and when?
- What future premiums do I avoid?
- What death or maturity benefits do I give up?
- What alternatives does this exact contract allow?
- What assumptions are being used?
- Which values came from the insurer and which were calculated?
Policy Iris intends to add validated cash-flow and IRR analysis later. Until those engines have been independently validated, the initial service should explain contract facts and direct users to official quotations rather than present a placeholder recommendation.
Sources and further reading
- LIC policy guidelines and helpline
- LIC policy conditions
- IRDAI Master Circular on Protection of Policyholders' Interests listing