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## What is LIC surrender Value?

Surrender value is the amount that an insurance company pays to the policyholder for surrendering the policy before the maturity date. Surrendering the policy means ending the policy before the date of maturity. Surrender value is paid only on insurance policies that have a savings component attached to it. The surrender value is calculated based on all the premiums paid by the policyholder until the date of surrender.

There are two types of surrender value; one is guaranteed surrender value and the other is a special surrender value. One can compute the surrender value by using either of the two.

Guaranteed surrender value is the amount paid to the policyholder in case he/she surrenders the policy before the maturity but after the policy has acquired the surrender value. It is usually a certain percentage of the total premiums that the holder pays. The percentage may vary depending on the policy type, term, and year. Usually, the percentage of the surrender value factor increases as the policy reaches maturity.

## How to Calculate LIC Surrender Value

Guaranteed surrender value is calculated using the formula: Surrender value factor * Total premiums paid

Special surrender value is a non-guaranteed amount, higher than or equal to the guaranteed amount. The special surrender value depends on the policy term, bonus (if any) and the number of premium installments the policyholder pays. The formula for special surrender value is

Special surrender value = [{Basic sum assured X Number of premiums paid/ number of premiums payable} + accrued bonuses] * applicable surrender value factor.

## Is LIC a good investment?

Individuals looking at protection and investment options in one product can consider these schemes. However, the choice of scheme largely depends on the investor’s profile, understanding and tolerance towards risk,  and financial objective.

Additionally, the investments in LIC are eligible for tax deductions under Section 80C and 80D of the Income Tax Act. Furthermore, on maturity, the entire amount is tax-free, in addition to the bonus received. Also, LIC investments offer liquidity in the form of loans guaranteed by the LIC.

### LIC vs Fixed Deposit

Fixed Deposits (FDs) are an investment product that offers higher returns than a savings account. The returns are assured, and investors have an option to withdraw prematurely or take a loan against the FD in case of any emergencies. FDs are pretty flexible as they have an investment tenure of 7 days to 10 years. Moreover, tax-saving FDs are exempt from tax under Section 80C of the Income Tax Act.

Life Insurance policies provide risk coverage in the event of the death of the policyholder. They qualify for tax deductions under Section 80C and 80D of the Income Tax Act. Many individuals use LIC as an insurance policy as well as an investment policy. They usually have a longer tenure than FDs.

Fixed deposits are an excellent investment option for both the short and long term. They help individuals in diverting their savings to investment. LIC, on the other hand, is an insurance policy that is for risk protection and protect the financial interests of family members in the absence of the policyholder. LIC is a long term investment (minimum of 10 years).

Moreover, one can know the returns of an FD at the time of investment. However, for insurance policies, the return is subject to market conditions.

Both FD and LIC are two separate investment products that cater to different purposes. It is a necessity to have an insurance policy, while FD is an investment option investors have. One can use FD for investment for the short and long term and insurance to get risk protection.

## Can I get Money Back if I Cancel My Life insurance?

Life insurance is an important purchase that one makes. However, it is a tough financial commitment as the policies are for 30 years or so. If the policyholder feels it is a strain on the budget, or finds a better policy, or doesn’t need life insurance anymore, then they usually cancel the policy. The repercussions of canceling the policy depend on the type of policy.

For a term life insurance policy, if canceled early, then the premium amount will not be refunded. A whole life insurance policy with a cash value can provide a refund of some amount when canceled. A return on premium (ROP) life insurance policies refunds the premiums if the policyholder is still alive after the policy expires.

If one cancels a life insurance policy early, then they will no longer have an insurance policy. In case they need a policy, then they might have to apply for a new one at a higher premium. Moreover, the fees for the medical exam and other costs might be higher. And if the policyholder gets a cash value from the canceled policy, then it is taxable in the hands of the policyholder.

Suppose the policyholder cancels the life insurance policy in the free period, which is usually 15 days from the time of purchase of the policy. In that case, they can get a full refund of the premiums paid. However, the insurance company deducts medical expenses and stamp duty charges.

## What are the benefits of LIC?

Life Insurance policies offer risk coverage in the unfortunate event of the death of the policyholder. LIC investments qualify for tax deductions under Section 80D and 80C of the Income Tax Act. Additionally, LIC is not just an insurance policy but also an investment policy by many. Following are some of the benefits of buying LIC:

• Wide range of plans: LIC has an array of plans that range from money back plans to endowment plans to cater to its diverse customer base. They offer innovative plans to provide the policyholder and their family with maximum benefit.
• Easy procedures: LIC provides an easy and hassle-free claim procedure. Historically, LIC has recorded the highest percentage of Claim Settlement Ratio across the industry (in 2015-16).
• Customer support: Being the industry leader, LIC has never let down their customer. LIC has a network of customer support that is among the best in the industry. Also, in 2015-16, LIC has provided a 100% grievance settlement.
• Simple process: LIC has simple processes making it easy for its customers to invest. The online customer services have made it easier for a policyholder to transact with LIC. One can get the entire detail of your policy just on an SMS.Trust: LIC is the most reputed and trusted insurance company in India. It has received hundreds of awards and recognitions such as India’s Most Trusted Brand-2015, Golden Peacock Award-2015, and Brand Icon Award among many others.