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Steps To Surrender LIC Policy Online
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Steps To Surrender LIC Policy Online

The Life Insurance Corporation of India has an unparalleled reputation among Indian policy buyers. The company offers a plethora of plans so that customers can choose the most suitable plan as per their requirements. But sometimes, people choose a LIC policy without proper knowledge of the plan. After some time, they look for getting LIC surrender value.

Steps To Surrender LIC Policy Online

Is it possible for a policyholder to surrender LIC policy at any time before the policy tenure ends? Yes, policyholders can surrender LIC policy online before the completion of the policy term. This closing is referred to as LIC policy closing or surrendering.

Let’s take a deeper look at what LIC policy cancellation is and how to cancel LIC policy after understanding the LIC surrender value and whether there are any LIC policy cancellation charges?

What is LIC Cancellation or Surrender of a Policy?

When you want to discontinue your policy before its maturity, then it is known as surrendering the policy. The value you will receive while closing LIC policy online is called the surrender value of LIC policy. Your surrender value will be calculated if you paid premiums for 3 years continuously. There will be no surrender value if you choose for LIC policy closing before 3 years. Moreover, you won’t get adequate surrender value, thus, surrender of the policy is not at all recommended. No financial expert will ever encourage you to cancel LIC policy.

Surrender Value Calculation

The formula used to calculate the LIC Surrender Value if you opt for LIC policy Closing Online is as follows:

Surrender Value= {Basic Sum Assured X (Number of Premiums Paid/Total Number of Premium Payable) plus Total Bonus received} X-Factor of Surrender Value

Surrender Value Payment

The surrender value of the LIC policy cancellation refund is decided at the time of purchase. There are two types of surrenders available as per the LIC Cancel Policy:

  • Guaranteed Surrender Value

Here, policyholders need to surrender their policies only after paying the premiums for 3 continuous years. If you surrender your LIC policy after 3 years, your surrender value will be 30% of the premiums paid (excluding the premiums that are paid in the initial year and the premiums paid towards the accidental benefit). Your surrender value will increase if you discontinue your policy later.

  • Special Surrender Value

If you stop paying premiums after certain years, your policy will continue but the sum assured amount will be decreased. This sum assured is known as paid-up value. The paid-up value is the original sum assured (number of premiums paid/number of premiums payable).

Once you submit your policy before its maturity, the policyholder receives the surrender value. Your surrender value will be more than the guaranteed surrender value and special surrender value.

Though the paid-up value and surrender value sounds similar, they have some differences.

Let’s take a look at it.

  • In case of paid-up value, you won’t receive the lump sum amount immediately. But policyholders receive surrender values immediately.
  • Total paid-up value is provided to policyholders. But in the case of surrender value, no compensation is offered to policyholders.


I want to close my LIC Policy

Never purchase a LIC policy before going through the terms and conditions properly. Because every LIC policy has its own terms and conditions and thus, LIC policy surrender processing time won’t be the same for all. The LIC policy surrender processing time depends on the premiums paid and the time of purchase of the policy.

LIC Cancellation Policy procedure varies as per the following premium plans:

  • Under the Single Premium Plan

Under this kind of plan, you are free to surrender your policy in the second year of purchase. But you can’t surrender your policy in the first year.

  • Under Limited Period and Regular Premium Plan

Under this plan, the terms and conditions are not the same for various policies.

  1. The surrender duration is 2 years if your policy is less than 10 years
  2. The surrender duration is 3 years if your policy is more than 10 years

What is the Procedure to Close LIC Policy?

A policyholder can submit his/her policy after paying the premiums for 3 years. Though experts don’t recommend surrendering the policy, still if you want, you need certain documents for LIC policy cancellation process:

  •       Original Policy Bonds
  •       Surrender Value Payment Request
  •       LIC Surrender Form (Form 5074)
  •       LIC NEFT Form
  •       Bank Account Details
  •       Original ID proof like Aadhar Card, PAN Card, and Driving License
  •       A Cancelled Cheque
  •       An official letter to LIC mentioning the reasons for surrendering the policy


How to Surrender LIC Policy?

The policyholder should follow the below-mentioned steps if he wants to surrender the policy.

How to Surrender LIC Policy


  1. The policyholder needs to visit the nearest branch of LIC along with a surrender discharge voucher. The surrender discharge voucher is called Form 5074.
  2. The policyholder should fill up and sign the form.
  3. After the submission of the form and documents, the company starts the process of surrendering the policy.
  4. Once your surrender request is approved, your bank account will get credited with the surrender value.
  5.  The policyholder is allowed to courier the voucher for surrender discharge along with imperative documents to LIC’s head office. The address of LIC’s head office is Yogakshema Building, Jeevan Bima Marg, P.O. Box No – 19953, Mumbai – 400 021. In this case, he/she doesn’t need to go to the branch office.

What happens if the policy is surrendered?

  •       The coverage is stopped immediately
  •       The policyholder receives the surrender value
  •       As a policyholder, you can’t revive the policy in future
  •       All benefits attached to the policy are ceased
  •       The surrender value is quite lower as compared to the total premiums paid by the policyholder



The customers will lose out on all the benefits of the policy if they surrender their LIC policies before the maturity period. If the policyholder surrenders it before a definite period, the amount of premiums is quite higher than the surrender value. Thus, before purchasing a LIC policy, a policyholder should read all the terms and conditions of the policy and then, select the most suitable one that complements his/her requirements.

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