Lic Money Back Policy Surrender Value Calculator
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Reviewed by Calculator Editorial Team
Understanding your LIC Money Back Policy surrender value is crucial when considering policy termination. This calculator helps you estimate the payout based on your policy term, premium payments, and interest rate. Learn how to use it, understand the formula, and see a worked example to make informed decisions about your policy.
How LIC Money Back Policy Surrender Works
A LIC Money Back Policy is a type of life insurance that provides both protection and savings benefits. The policyholder pays regular premiums, and the insurer guarantees a sum assured at maturity. Additionally, the policy includes a savings component that grows over time.
Key Features
- Regular premium payments
- Guaranteed sum assured at maturity
- Savings component that grows with interest
- Option to surrender the policy before maturity
Surrender Value Calculation
When you surrender your policy before maturity, you receive the surrender value, which is typically less than the total premiums paid. This is because the insurer has invested your premiums and must account for the time value of money.
Important Note
The surrender value is calculated based on the policy's surrender table provided by LIC. This table accounts for the time value of money and the insurer's investment returns.
Calculation Formula
The surrender value of a LIC Money Back Policy is calculated using the following formula:
Surrender Value Formula
Surrender Value = (Total Premiums Paid - Withdrawals) × Surrender Factor
Where:
- Total Premiums Paid = Annual Premium × Number of Years Paid
- Surrender Factor = Value from LIC's surrender table for the specific policy term and age
The surrender factor accounts for the time value of money and the insurer's investment returns. It varies based on the policy term and the age at which the policy is surrendered.
Worked Example
Let's calculate the surrender value for a policy with the following details:
- Annual Premium: ₹50,000
- Number of Years Paid: 10
- Surrender Factor (from LIC's table): 0.75
Calculation Steps
1. Total Premiums Paid = ₹50,000 × 10 = ₹500,000
2. Surrender Value = ₹500,000 × 0.75 = ₹375,000
In this example, surrendering the policy after 10 years would result in a payout of ₹375,000.
Frequently Asked Questions
- What is the surrender value of a LIC Money Back Policy?
- The surrender value is the amount you receive when you terminate your policy before maturity. It is calculated based on the total premiums paid and the surrender factor from LIC's table.
- How is the surrender value calculated?
- The surrender value is calculated by multiplying the total premiums paid by the surrender factor, which accounts for the time value of money and the insurer's investment returns.
- Can I surrender my LIC Money Back Policy at any time?
- Yes, you can surrender your policy at any time, but the surrender value will be less than the total premiums paid. The exact amount depends on the policy term and the surrender factor.
- Is the surrender value taxable?
- Yes, the surrender value is typically taxable as per the Income Tax Act. You should consult a tax advisor to understand your obligations.
- How do I find the surrender factor for my policy?
- The surrender factor can be found in LIC's surrender table, which is provided with the policy documents. You can also contact LIC's customer service for assistance.