How to give up the LIC policy after 3 years (Full Guide)

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How to give up the LIC policy after 3 years

Many people buy LIC policies without knowing the features and edges. However, once a few days we feel that such LIC policies are irrelevant. Therefore, we would like to get rid of these policies. The answer is to give up such LIC policies. How to waive the LIC policy after 3 years or before expiration?

What is the meaning of surrender of the life insurance policy?

It is the option to exit the life insurance product before maturity, so that the insured can obtain the amount that is called surrender value. A regular premium policy is eligible for delivery once the insured has paid premiums continuously for 3 years.

As I said, to be eligible for delivery of the policy must complete 3 years. By giving up the LIC policy, you will not make a profit because you will be paid a portion of the total accumulated bonus and also the premium you paid.

How to give up the LIC policy after 3 years

How to give up the LIC policy after 3 years

 

Implications after the delivery LIC policy

1) you will lose the life insurance protection available from the policy. As the delivery of the LIC policy is considered because the contract closes between you and the insurance company.

2) The tax advantages used under Article 80C of the IT Act are reversed if the policy is terminated / cease to be in force within 2 years for traditional products and 5 years for ULIP products at the start date Of politics.

Types in the delivery LIC policy

 

There are two types of surrenders. Let’s discuss both types.

 

1) Guaranteed Performance Value

If your policy is eligible for this redemption value then it must be mentioned within the policy policy and paid once the 3 year termination. It is typically 30 minutes of premiums paid, excluding the premium for the primary year. It collectively excludes any additional premiums paid to riders, taxes and any premiums you simply may have received from the LIC.

However, the percentage of this guaranteed redemption value may depend on the policy term and the policy year during which the policy is waived.

Let’s say your annual premium is Rs.1 lakh and you paid it for 4 years.

Total premium paid = Rs.4 lakh.

Premium without first year = Rs.3 lakh.

Then the value of the Guaranteed Delivery is 30 minutes of premiums paid (excluding the first year premium). Therefore, 30% of Rs.3,00,000 will be Rs.90,000 is what you get.

Remember that this Guaranteed Performance value will not add the already accumulated bonus.

2) Special Rescue Value

It is calculated as follows. But before that, you must understand a term more called Value Paid.

What is the meaning of the amount paid and the total amount paid?

If premiums are paid for a minimum of 3 consecutive years and no subsequent premium has not been paid within the grace period, then expired policies are called paid policies. The insured sum is reduced to a proportionate insured sum that was available during the purchase of the policy.

For example, if the sum Insured is Rs.5 lakh and therefore the total number of premiums payable is 20 years and premium payable is annual and allows us to say that premiums are paid for 10 years. After that, it disrupts the policy.

This discontinued policy is called payment policy. This can be calculated as below.

Amount paid = (No. of premiums paid / No. of premiums payable) * Amount insured.

Amount paid = (10/20) * Rs.5 lakh = Rs.2.50,000.

So as of year 11, the policy can continue with the insured amount of Rs.2,50,000 only in place of the original Rs.5.00,000. Together with this sum paid insured the premium already accumulated until the tenth year is added. This can be known as the total paid value. Therefore, the total paid value = Amount paid + accrued bonus.

What is the meaning of the special delivery value?

In simple terms, the Special Yield Value is the% of Total Paid Value and is calculated as follows.

Special redemption value = (insured sum * (number of premiums paid / number of premiums paid) + total premium received) * salvage value factor.

In simple, Special Yield Value = Total Paid Value * Yield Value Factor.

This surrender value factor changes according to the term of the policy and many other things. Typically, this value is zero for the first 3 years. Therefore, for the particular year and for your policy, you need to check with LIC for this data.

What is the difference between the value paid and the surrender value?

I created below the table for your understanding of the difference between the meanings of the value paid up and the value of surrender.

If LIC declares any future bonds or guaranteed additions to the product, then your policy is not eligible for such future bond or GA. You can only receive the full amount paid at the expiration or death of the insured.

The total amount paid is payable to you at maturity or your candidate (if your death occurs during the policy period).

How to give up the LIC policy after 3 years

How to give up the LIC policy after 3 years

 

Difference between LIC policy paid and delivery

I hope you now understand the concept of value paid, total paid value and surrender value.

How to give up the LIC policy?

Keep in mind that currently the LIC waiver policy is not possible online. In addition, you have to deliver the LIC policy on your service LIC branch only. Branch of service is also the branch wherever you have purchased the policy. Otherwise, if you have modified the branch, that particular LIC branch will represent the branch of service for you. The reason for this can be, all your policy documents like proposal forms, loan details and all other details are available at the service branch.

Documents Required for Delivery LIC Policy

Bonds of the original policy
Download the delivery form of policy LIC No.5074. Take the impression and go with this form.
Bank canceled check sheet (your name must be printed on the check) or photocopy of the bankbook. Because the LIC now issues the payment directly to the beneficiary’s bank account. LIC stopped issuing checks.
Fill out the LFT NEFT Form if you are not using the Delivery Form mentioned above and send it.
Go with original identification test like Aadhaar, driving license or PAN card. Verify and take the photocopy of it and return the original.
Once you send the necessary documents, within 5-10 days the fund is transferred to your bank account.

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