LIC Jeevan Shirmoani plan can be surrendered anytime after one full year’s premiums have been paid. In case you have not paid one full year’s premium, there is no surrender value and your money is lost.
The plan has a Guaranteed Surrender Value based on the number of premiums that have been paid.
Guaranteed Surrender Value = Guaranteed Surrender Value Factor x Total premiums paid minus any survival benefits due and payable.
The total premiums paid DO NOT include taxes, rider premiums, and any increased premium on account of underwriting decisions.
We will understand this better with the help of an example, once the surrender value factors have been shown.
The Guaranteed Surrender Value Factors are as follows:
| Policy Term | ||||
| 14 | 16 | 18 | 20 | |
| 1 | 20.00% | 20.00% | 20.00% | 20.00% |
| 2 | 30.00% | 30.00% | 30.00% | 30.00% |
| 3 | 30.00% | 30.00% | 30.00% | 30.00% |
| 4 | 50.00% | 50.00% | 50.00% | 50.00% |
| 5 | 50.00% | 50.00% | 50.00% | 50.00% |
| 6 | 50.00% | 50.00% | 50.00% | 50.00% |
| 7 | 50.00% | 50.00% | 50.00% | 50.00% |
| 8 | 55.00% | 53.75% | 53.00% | 52.50% |
| 9 | 60.00% | 57.50% | 56.00% | 55.00% |
| 10 | 65.00% | 61.25% | 59.00% | 57.50% |
| 11 | 70.00% | 65.00% | 62.00% | 60.00% |
| 12 | 75.00% | 68.75% | 65.00% | 62.50% |
| 13 | 80.00% | 72.50% | 68.00% | 65.00% |
| 14 | 80.00% | 76.25% | 71.00% | 67.50% |
| 15 | 80.00% | 74.00% | 70.00% | |
| 16 | 80.00% | 77.00% | 72.50% | |
| 17 | 80.00% | 75.00% | ||
| 18 | 80.00% | 77.50% | ||
| 19 | 80.00% | |||
| 20 | 80.00% | |||
The Guaranteed Additions also paid out as a factor.
Surrender Value of Guaranteed Additions = Surrender Value of Guaranteed Additions Factor x Total Guaranteed Additions accrued so far.
The Surrender Value for Guaranteed Additions Factors are as follows:
| Policy Term | ||||
| 14 | 16 | 18 | 20 | |
| 1 | 4.25% | 4.10% | 3.85% | 3.45% |
| 2 | 8.85% | 8.85% | 8.03% | 7.22% |
| 3 | 17.85% | 17.58% | 17.03% | 16.22% |
| 4 | 18.16% | 17.66% | 17.58% | 16.58% |
| 5 | 18.60% | 17.85% | 17.58% | 17.03% |
| 6 | 19.18% | 18.16% | 17.66% | 17.58% |
| 7 | 19.93% | 18.60% | 17.85% | 17.58% |
| 8 | 20.85% | 19.18% | 18.16% | 17.66% |
| 9 | 21.99% | 19.93% | 18.60% | 17.85% |
| 10 | 23.38% | 20.85% | 19.18% | 18.16% |
| 11 | 25.05% | 21.99% | 19.93% | 18.60% |
| 12 | 27.06% | 23.38% | 20.85% | 19.18% |
| 13 | 30.00% | 25.05% | 21.99% | 19.93% |
| 14 | 35.00% | 27.06% | 23.38% | 20.85% |
| 15 | 30.00% | 25.05% | 21.99% | |
| 16 | 35.00% | 27.06% | 23.38% | |
| 17 | 30.00% | 25.05% | ||
| 18 | 35.00% | 27.06% | ||
| 19 | 30.00% | |||
| 20 | 35.00% | |||
Lets us now understand how to calculate the Surrender Value in LIC Jeevan Shiroman Plan with the help of an example of Mahesh.
Age – 30 years
Sum Assured – Rs. 1 crore
Policy Term – 14 years
Premium Paying Term = 10 years
Premium Payment Mode – Yearly
The annual premium for Mahesh would be Rs. 10,75,550 + taxes.
Scenario 1 – Suppose Mahesh decides to surrender the policy after 6 policy years.
So after 6 years:
Total premiums paid = 6 x 10,75,550 = Rs. 64,53,300
Guaranteed Additions in the 1st 5 years = 5 x 5,00,000 = Rs. 25,00,000
Guaranteed Additions in the 6th year = Rs. 5,50,000
Total Guaranteed Additions = 25,00,000 + 5,50,000 = Rs. 30,50,000
Survival Benefit after 6 years = Nil
Guaranteed Surrender Value = Surrender Value of Premiums Paid + Surrender Value of Guaranteed Additions – Survival Benefits
Surrender Value of Premiums Paid = Guaranteed Surrender Value Factor x Premiums paid = 50% x 64,53,300 = Rs. 32,26,650
Surrender Value of Guaranteed Additions = Surrender Value Factor for Guaranteed Additions x Guaranteed Additions = 19.18% x 30,50,000 = Rs. 5,84,990
Hence the Guaranteed Surrender Value = 32,26,650 + 5,84,990 = Rs. 38,11,640
Scenario 2 – Suppose Mahesh decides to surrender the policy after 6 policy years.
So after 10 years:
Total premiums paid = 10 x 10,75,550 = Rs. 1,07,55,500
Guaranteed Additions in the 1st 5 years = 5 x 5,00,000 = Rs. 25,00,000
Guaranteed Additions in the 6th to 10th year = 5 x 5,50,000 = Rs. 27,50,000
Total Guaranteed Additions = 25,00,000 + 27,50,000 = Rs. 52,50,000
Survival Benefit received after 10 years = 30% x 1,00,00,000 = Rs. 30,00,000
Guaranteed Surrender Value = Surrender Value of Premiums Paid + Surrender Value of Guaranteed Additions – Survival Benefit
Surrender Value of Premiums Paid = Guaranteed Surrender Value Factor x Premiums paid = 65% x 1,07,55,500 = Rs. 69,91,075
Surrender Value of Guaranteed Additions = Surrender Value Factor for Guaranteed Additions x Guaranteed Additions = 23.38% x 52,50,000 = Rs. 12,27,450
Survival Benefit Paid = Rs. 30,00,000
Hence the Guaranteed Surrender Value = 69,91,075 + 12,27,450 – 30,00,000 = Rs. 52,18,525
LIC may pay a Special Surrender Value in this Jeevan Shiromani Plan. The special surrender value can only be known at the time of surrendering and on contacting LIC.
If you have any questions on this, do drop a comment and we will get back to you.
