Insurance behemoth LIC is understood to have approached insurance regulator IRDAI, seeking a review of final Surrender Value Guidelines issued in June 2024.
These final guidelines were policyholder friendly as it increased the surrender value significantly from earlier 30 per cent to over 70 per cent, said insurance industry experts.
LIC is now understood to have pitched to relook at the way surrender value is to be calculated, sources said. All eyes are now on IRDAI to see if it will accede to LIC’s request, especially when guidelines are to be implemented in a month
Surrender value
Surrender value in a life insurance policy refers to the amount of money a policyholder receives even if they decide to terminate (surrender) their policy before its maturity or before a claim is made.
This value is typically a portion of the premiums paid, minus any fees or charges and is calculated based on how long the policy has been in force and the amount of premium paid.
The surrender value usually grows over time, meaning the longer you hold the policy, the higher the surrender value. However, surrendering a policy early in its term might result in a low or even zero surrender value, as most policies have a lock-in period during which no surrender value is available.
Surrendering a policy means that the policyholder forfeits the death benefit and the insurance coverage ends.