LIC Policy Surrender: Understand Losses Before Closing Mid-Term
Money
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News18•29-01-2026, 19:01
LIC Policy Surrender: Understand Losses Before Closing Mid-Term
- •Surrendering an LIC policy prematurely means cancelling it before maturity and requesting money back from the insurer.
- •The amount returned, called 'surrender value,' is often significantly less than premiums paid due to initial deductions like agent commission and administrative costs.
- •The biggest loss is the immediate termination of life insurance cover, leaving the policyholder's family without death benefits.
- •Term insurance plans have no savings component, so surrendering them midway provides neither cover nor returns.
- •A better alternative to surrendering is converting to a 'paid-up policy,' where premiums stop, but the policy continues with a reduced sum assured until maturity.
Why It Matters: Understand the significant financial and security losses before surrendering an LIC policy; consider paid-up option.
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