LIC Policy Surrender Value & Bonus Calculator
LIC Policy Surrender Value is the lump sum payout returned to an insured policyholder who voluntarily terminates their life insurance policy before maturity. Under IRDAI regulations, LIC pays the higher of Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV), calculated after completing at least 2 full years of regular premium payments.
LIC Policy Surrender Value & Bonus Calculator
Compare Guaranteed Surrender Value (GSV) vs Special Surrender Value (SSV), accrued bonus, and capital loss
The minimum policy face value specified in your LIC bond document.
Base yearly premium. Exclude 4.5% GST (year 1) or 2.25% GST (renewal) and rider charges.
Currently using declared average of ₹46 per ₹1,000 SA/year
Surrendering an active life policy cancels your insurance coverage of ₹5,00,000 and forfeits ₹53,600 of your invested hard-earned money.
Payout vs Sunk Cost Ratio
Year-by-Year Surrender Value & Bonus Accumulation Schedule
Projected payout if surrendered at different policy anniversaries based on ₹28,000 annual premium
| Policy Year | Premiums Paid | Accrued Bonus | Paid-Up Sum Assured | GSV | SSV (Special) | Estimated Payout | Net Capital Loss |
|---|---|---|---|---|---|---|---|
| Year 1 | ₹28,000 | ₹23,000 | ₹25,000 | ₹0 | ₹0 | ₹0 | ₹28,000 |
| Year 2 | ₹56,000 | ₹46,000 | ₹50,000 | ₹11,620 | ₹30,720 | ₹30,720 | ₹25,280 |
| Year 3 | ₹84,000 | ₹69,000 | ₹75,000 | ₹24,430 | ₹46,080 | ₹46,080 | ₹37,920 |
| Year 4 | ₹1,12,000 | ₹92,000 | ₹1,00,000 | ₹48,440 | ₹69,120 | ₹69,120 | ₹42,880 |
| Year 5 (Selected) | ₹1,40,000 | ₹1,15,000 | ₹1,25,000 | ₹66,350 | ₹86,400 | ₹86,400 | ₹53,600 |
| Year 6 | ₹1,68,000 | ₹1,38,000 | ₹1,50,000 | ₹82,420 | ₹1,15,200 | ₹1,15,200 | ₹52,800 |
| Year 7 | ₹1,96,000 | ₹1,61,000 | ₹1,75,000 | ₹98,490 | ₹1,34,400 | ₹1,34,400 | ₹61,600 |
| Year 8 | ₹2,24,000 | ₹1,84,000 | ₹2,00,000 | ₹1,28,040 | ₹1,68,960 | ₹1,68,960 | ₹55,040 |
| Year 9 | ₹2,52,000 | ₹2,07,000 | ₹2,25,000 | ₹1,57,170 | ₹1,90,080 | ₹1,90,080 | ₹61,920 |
| Year 10 | ₹2,80,000 | ₹2,30,000 | ₹2,50,000 | ₹1,96,000 | ₹2,30,400 | ₹2,30,400 | ₹49,600 |
| Year 11 | ₹3,08,000 | ₹2,53,000 | ₹2,75,000 | ₹2,24,420 | ₹2,74,560 | ₹2,74,560 | ₹33,440 |
| Year 12 | ₹3,36,000 | ₹2,76,000 | ₹3,00,000 | ₹2,62,520 | ₹3,22,560 | ₹3,22,560 | ₹13,440 |
| Year 13 | ₹3,64,000 | ₹2,99,000 | ₹3,25,000 | ₹2,94,430 | ₹3,80,640 | ₹3,80,640 | ₹0 (Gain) |
| Year 14 | ₹3,92,000 | ₹3,22,000 | ₹3,50,000 | ₹3,37,400 | ₹4,43,520 | ₹4,43,520 | ₹0 (Gain) |
| Year 15 | ₹4,20,000 | ₹3,45,000 | ₹3,75,000 | ₹3,72,800 | ₹5,11,200 | ₹5,11,200 | ₹0 (Gain) |
| Year 16 | ₹4,48,000 | ₹3,68,000 | ₹4,00,000 | ₹4,28,000 | ₹5,83,680 | ₹5,83,680 | ₹0 (Gain) |
| Year 17 | ₹4,76,000 | ₹3,91,000 | ₹4,25,000 | ₹4,67,350 | ₹6,69,120 | ₹6,69,120 | ₹0 (Gain) |
| Year 18 | ₹5,04,000 | ₹4,14,000 | ₹4,50,000 | ₹5,28,800 | ₹7,60,320 | ₹7,60,320 | ₹0 (Gain) |
| Year 19 | ₹5,32,000 | ₹4,37,000 | ₹4,75,000 | ₹5,72,100 | ₹8,57,280 | ₹8,57,280 | ₹0 (Gain) |
| Year 20 | ₹5,60,000 | ₹4,60,000 | ₹5,00,000 | ₹6,39,800 | ₹9,60,000 | ₹9,60,000 | ₹0 (Gain) |
Statutory LIC Surrender Value Mathematical Formulas
Life Insurance Corporation of India (LIC) evaluates two separate formulas and pays the policyholder whichever calculation yields the higher amount:
1Guaranteed Surrender Value (GSV) Formula
Where premiums exclude GST, service tax, extra underwriting loadings, and optional riders (such as Accident Benefit or Critical Illness).
2Special Surrender Value (SSV) Formula
Total Paid-up Value = Paid-up Sum Assured + Total Accrued Simple Reversionary Bonuses
SSV = Total Paid-up Value × (LIC Special Surrender Value Factor / 100)
MAX(GSV, SSV). In over 90% of participating with-profits policies (Jeevan Anand, Jeevan Labh, New Endowment), the Special Surrender Value (SSV) is higher than the GSV.Worked Step-by-Step Example: Surrendering LIC New Jeevan Anand (₹5 Lakh Sum Assured)
Suppose Mr. Rajesh Kumar purchased an LIC New Jeevan Anand policy (Table 915) with a Basic Sum Assured of ₹5,00,000 for a 20-year term, paying an annual premium of ₹28,000. Due to a financial emergency, he decides to surrender the policy after paying for 5 full years.
Policy Profile
Bonus & Paid-Up Accrual
Step 1: Guaranteed Surrender Value (GSV)
- Premiums eligible for GSV = ₹1,40,000 - ₹28,000 (1st year excluded) = ₹1,12,000.
- GSV Premium Factor at 5 years = 50% → ₹1,12,000 × 50% = ₹56,000.
- GSV Bonus Factor with 15 years remaining = 9% → ₹1,15,000 × 9% = ₹10,350.
- Total GSV = ₹56,000 + ₹10,350 = ₹66,350.
Step 2: Special Surrender Value (SSV)
- Total Paid-up + Bonus = ₹1,25,000 + ₹1,15,000 = ₹2,40,000.
- SSV Factor with 15 years remaining = 36% (0.36).
- Total SSV = ₹2,40,000 × 36% = ₹86,400.
Step 3: Payable Amount and Financial Loss Analysis
LIC pays MAX(₹66,350, ₹86,400) = ₹86,400.
Net Sunk Capital Loss: Mr. Rajesh paid ₹1,40,000 in premiums but receives only ₹86,400. He incurs a permanent capital loss of ₹53,600 (38.3% loss), and forfeits his ₹5,00,000 life insurance protection.
IRDAI & LIC Guaranteed Surrender Value (GSV) Factor Table
The table below indicates the minimum statutory GSV premium factor mandated by IRDAI across policy durations:
| Completed Premium Years | GSV Premium Factor (% of Premiums Paid after Year 1) | Remaining Policy Term (Years) | GSV Bonus Discount Factor |
|---|---|---|---|
| Year 1 | 0% (Ineligible) | 18+ Years | 5.0% |
| Year 2 | 30.0% | 15–17 Years | 7.0% – 9.0% |
| Year 3 | 35.0% | 12–14 Years | 11.0% |
| Years 4 – 7 | 50.0% | 8–11 Years | 14.0% – 17.0% |
| Years 8 – 9 | 55.0% – 60.0% | 5–7 Years | 20.0% |
| Years 10 – 15 | 65.0% – 77.5% | 2–4 Years | 25.0% – 30.0% |
| Years 16 – 19 | 80.0% – 87.5% | 1 Year | 30.0% |
| Year 20 and Above | 90.0% | 0 Years (At Term End) | 35.0% |
Surrender vs Paid-Up vs Policy Loan: Which Option Should You Choose?
Immediate Cash: Paid out within 7-10 working days.
Capital Destruction: You forfeit 30% to 70% of total premiums deposited.
Life Cover: Terminated instantly.
Future Outflow: Stop paying any future premiums. Zero new investment needed.
Maturity Payout: 100% of Paid-up Sum Assured + 100% of Accrued Bonus is paid at original maturity.
No Surrender Penalty: No heavy discount factors deducted.
Borrowing Limit: Up to 90% of the surrender value as an instant loan.
Low Interest: Simple interest rate of ~9.0% to 9.5% p.a., much cheaper than personal loans or credit cards.
Life Cover: Remains 100% fully intact.
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Frequently Asked Questions on LIC Policy Surrender Value & Bonus
How is LIC policy surrender value calculated?
LIC calculates surrender value using two statutory methods: Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV). Under IRDAI guidelines, LIC pays whichever amount is higher. GSV equals a percentage of total premiums paid (excluding the 1st year premium, taxes, and riders) plus a discounted fraction of accrued bonuses. SSV equals the Paid-up Sum Assured plus total accrued reversionary bonuses, multiplied by the LIC actuarial surrender factor based on remaining policy years.
When can I surrender my LIC policy without getting zero payout?
Under IRDAI and LIC regulations, policies acquire a guaranteed surrender value only after at least 2 consecutive full years of premiums have been paid (or 3 full years for older policies with Premium Paying Term of 10 years or more). If you surrender before completing 2 full years, the policy lapses with zero surrender value, and all deposited premiums are forfeited.
What is the difference between Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV)?
Guaranteed Surrender Value (GSV) is the statutory minimum amount guaranteed by the Insurance Act, 1938. Special Surrender Value (SSV) is a more realistic actuarial valuation based on the accumulated asset share of the policy. In almost all active endowment and money back policies, the SSV is significantly higher than the GSV, and LIC pays the higher SSV figure.
Is it better to surrender an LIC policy or make it Paid-Up?
Making a policy "Paid-Up" is usually far superior to surrendering. When you surrender, you incur severe immediate capital destruction (often losing 40% to 70% of deposited premiums). If you make the policy paid-up, you stop paying future premiums, and at the end of the original term (or upon death), LIC pays 100% of the proportionate Paid-up Sum Assured plus 100% of the accrued bonuses without deducting surrender discount penalties.
Can I take a loan against my LIC policy instead of surrendering it?
Yes. If your policy has completed at least 3 years and acquired a surrender value, you can avail of an LIC Policy Loan of up to 90% of the payable surrender value (or up to 85% for paid-up policies). LIC charges competitive simple interest (around 9% to 9.5% p.a.), and your life cover remains active.
Is LIC policy surrender value taxable under Indian Income Tax Act?
Under Section 10(10D) of the Income Tax Act, surrender proceeds from life insurance policies where the annual premium does not exceed 10% of the sum assured (for policies issued after April 1, 2012) are completely tax-exempt. However, if the policy is surrendered before 2 full years, any tax deductions previously claimed under Section 80C are reversed and treated as taxable income in the year of surrender.