Surrendering Your LIC Money Back Policy: A Comprehensive Guide
Many individuals consider surrendering their Life Insurance Corporation (LIC) money back policy for financial reasons. However, the process is more complex than simply withdrawing funds, and it involves certain requirements. This guide outlines the process and provides a detailed understanding of the implications.
Understanding the Surrender Process
When you want to surrender your LIC money back policy, you need to comply with a series of requirements to ensure that the process is handled smoothly. The first step is to fill out a properly signed and witnessed surrender form. Additionally, you'll need to provide KYC proof, a copy of your PAN card, and a cancelled cheque along with the original policy bond for cancellation. These documents are essential to verify your identity and confirm the details of your policy.
Should You Surrender?
It is important to note that surrendering your policy is not the same as withdrawing money from a bank deposit. When you surrender a policy, you have to pay surrender charges, and any bonuses accrued over the years will not be refunded. This is because the policy is a contractual agreement with specified terms, including the sum assured and bonuses.
It is highly recommended that you carefully consider the implications of surrendering your policy. It represents a significant portion of your hard-earned money, and you should only proceed if you are certain it is the best course of action. If you need immediate funds, you might consider applying for a loan, which is a more straightforward and less punitive process.
Why Avoid Buying from LIC?
There are several compelling reasons to avoid purchasing policies from LIC. Firstly, LIC is a government-owned corporation, known for its bureaucratic and cumbersome procedures, especially when it comes to surrendering policies. They are proactive when you purchase the policy but are often unresponsive when you need to surrender it, making the process frustrating and time-consuming.
Secondly, life insurance policies from LIC lag in terms of growth and returns compared to those from competitive players in the market such as SBI Life, PNB Metlife, and HDFC Life. This is largely due to the fact that agents at LIC are incentivized to push policies, leading to a higher emphasis on commission rather than the actual benefits the policy offers.
Thirdly, the surrender process for an LIC policy is limited to the branch where the policy was issued. This can cause significant inconvenience if you have moved to a different location, as you would need to travel back to the original branch to complete the surrender process. This can be time-consuming and costly in the long run.
Furthermore, during the surrender process, you may encounter attempts by LIC officials to create unnecessary documentation or provide bizarre excuses to discourage you from surrendering. This can be frustrating and add to the hassle of the process.
In some cases, whistleblowers have shared their experiences of dealing with LIC agents. For instance, an individual who had seven LIC policies for over ten years and paid premiums for more than a decade found that surrendering these policies led to significant losses. Two of the policies were valued above the premium paid, but they were still far less than what comparable plans from other insurers could offer. The individual incurred a loss on all seven policies.
Upon closer analysis, you can see that policies from the top three players, SBI Life, PNB Metlife, and HDFC Life, provided a much better return over the same period. These lenders have recognized the importance of customer satisfaction and have constantly worked to improve their product offerings.
Final Thoughts
When considering surrendering your LIC money back policy, it is crucial to weigh the potential costs and benefits carefully. If you do decide to surrender, make sure you comply with all the necessary requirements and be prepared for any potential complications. It is also advisable to explore alternative options, such as taking out a loan, to meet your financial needs without incurring additional costs.
Ultimately, it is always best to take informed decisions when it comes to your financial investments. Your hard-earned money deserves the best possible return, and understanding the nuances of the insurance market can help you make better choices.