How to Surrender an LIC Policy Online Before Maturity - A Comprehensive Guide

The process of surrendering an LIC (Life Insurance Corporation) policy requires careful consideration. This guide will help you understand the requirements and steps involved in surrendering your policy online before its maturity, regardless of your agent or policy servicing branch.

Requirements for Surrendering an LIC Policy

Before you proceed with the surrender process, it's essential to know the requirements and restrictions. LIC policies can typically be surrendered at the end of the fourth year after paying the first three years of premium. However, surrendering before the fourth year would result in significant penalties. If you haven't completed the fourth year, you will need to visit a servicing branch with your policy bond, bank account details, and a copy of your Aadhar card. Additional forms for LICY would be provided there.

Online Surrendering of LIC Policy

For online surrendering of an LIC policy, you need to follow these steps:

1. Check Eligibility

Ensure that your policy has completed the gestation period, which is the initial period after which you can start the surrender process. This is generally the end of the fourth year after initiating the policy.

2. Review the Surrender Application

Visit your local LIC branch or an authorized representative to get a surrender form. This form is crucial as it outlines the surrender process and details. Ensure you fulfill all the requirements mentioned in the form to avoid delays.

3. Gather Required Documents

Gather the following documents:

Your Policy Bond Bank Account Proof KYC Documents (such as a PAN card) A copy of your Aadhar card

While you can submit the form online, it's often safer to visit the branch in person, as they will physically verify all the documents. Even if you manage to fill the form online, a signature service might still be required.

4. Submit the Surrender Application

Once you have all the required documents, submit the surrender application at the branch. The agent or official at the branch will guide you through the process. Keep copies of all the submitted documents for your records.

5. Await Surrender Value

The surrender value will be credited to your specified bank account. The amount typically ranges from 35 to 40 percent of the premium paid, depending on the policy plan and surrender period.

Considerations Before Surrendering

Before proceeding with the surrender, consider the following:

Loss of Bonus: Calculate the loss of any accumulated bonuses and final additional bonuses before deciding to surrender. LIC Policy Servicing Office Head: Get detailed information about the surrender process from the head of the department or servicing office. Also, understand the implications of surrendering on IRDAI rules and regulations. Calculating Surrender Value: Understand the exact surrender values and the terms and conditions associated with the surrender process.

Alternatives to Surrendering

Instead of surrendering, consider the following alternatives:

Surrender with Existing Plan: If you have an existing LIC plan, you can opt to surrender the old policy and reinvest in a new one. This can be beneficial if the new plan offers better returns. No Surrender Option: Evaluate if your policy is too valuable and should not be surrendered. Sometimes, it might be wiser to keep the policy and wait for its maturity. Loan Against Policy: If you need an emergency fund, you might consider taking a loan against your policy. This can be a temporary solution without damaging your long-term financial goals.

By carefully considering these factors and following the recommended steps, you can make an informed decision about surrendering your policy and avoid unnecessary losses.