Many LIC policyholders wonder: Can I surrender my policy before it matures?
The answer is yes, but there are rules, penalties, and financial consequences involved. This guide explains how to surrender your LIC policy early and what you should know before making the decision.
❓What Does “Surrender Before Maturity” Mean?
Surrendering a policy means you’re voluntarily terminating the contract with LIC before its full term. This usually happens due to financial emergencies, policy dissatisfaction, or better investment opportunities.
🧮 LIC Surrender Rules Before Maturity
- Minimum Lock-in Period: You must complete 3 full years of premium payment to be eligible for surrender.
- If surrendered before 3 years: You get nothing. No refund, no benefits.
- If surrendered after 3 years: You’re eligible for a Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV), whichever is higher.
💰 LIC Surrender Value Calculation (Example)
Let’s say you’ve paid ₹50,000/year for 3 years = ₹1,50,000 total.
- GSV = 30% of total premiums (excluding 1st year premium & rider charges)
- Approx Refund = ₹50,000 to ₹60,000
📉 You could lose 50% or more of what you invested.
🚫 Penalty or Loss When Surrendering Early
- You lose all future returns & bonuses.
- LIC applies a surrender penalty by giving back only a portion of your premiums.
- No tax benefits on surrendered policy under Sec 80C.
📜 Documents Required for Early Surrender
- Original LIC policy bond
- Surrender form (Form 5074)
- PAN & Aadhaar copy
- Cancelled cheque
- NEFT form
📍 Submit these to your LIC branch physically – online surrender isn’t yet available.
📆 Processing Time & Refund
- It takes around 7–10 working days to process and credit your refund.
- You’ll receive an SMS confirmation once it’s done.
🧠 Should You Surrender LIC Policy Before Maturity?
✔️ Pros:
- Get immediate cash
- Stop future premium payments
❌ Cons:
- Huge loss of savings
- No death benefit or maturity benefit
- Loss of tax deductions and bonuses
🛑 Alternatives to Surrendering
- Make it a paid-up policy (no more premiums, reduced benefits)
- Take a loan against policy
- Switch to another LIC plan with help from an agent
📞 Need Help with LIC Surrender Process in Gurgaon?
We offer free LIC policy reviews and surrender guidance. Call us today to explore your options without losing too much of your hard-earned money.
👉 Contact Us for a free consultation.
🔎 FAQs
Q: Can I surrender LIC policy after 1 year?
A: No. You need to complete at least 3 years of premium payment to be eligible for surrender.
Q: Will I get the full premium back?
A: No. You will only receive a partial refund called the Surrender Value.
Q: Is surrendering better than making it paid-up?
A: Often, making it paid-up retains some benefits. Surrender should be your last resort.