Highlights
One-fourth of the people who buy insurance are unable to pay the next installment after paying the first premium.
Early closure results in a loss of premium to the insured and reduces the benefits accrued.
If the insurance policy is discontinued midway, the consumer has to pay surrender charges.
New Delhi. With the Corona epidemic, there was a tremendous increase in the purchase of insurance policies in the country. However, later due to the economic crisis, crores of people either closed the policy in the middle or surrendered the policy. Due to this, the policyholders suffered a lot. Today we are telling you that if you surrender the insurance policy before the maturity period, then what will be the losses to you? Also, we will tell you how much amount you will get back after closing the policy after how many days and what is the process of surrendering it.
Statistics show that a quarter of people who buy life insurance are unable to pay the next installment after paying the first premium and the policy lapses. At the same time, there are also a large number of people who pay premiums for a long time, but surrender the policy before maturity. In both situations, the insured suffers a lot of premium loss, and the benefits accruing also get reduced.
Why do people surrender the policy?
Many reasons have come to the fore for abandoning the insurance plan midway. The first of these is economic problems. Actually, most people keep life insurance as their last priority. In such a situation, when a consumer has to face any kind of financial challenge in daily life, then the first deduction in expenses goes on the insurance premium. However, if the financial condition improves, the consumer can also get the policy restarted by paying the missed installments. Second, when a subscriber does not get all the benefits of the insurance plan, he can still surrender the policy.
(“किसी भी विज्ञापन पर क्लिक करें और विज्ञापनों को लोड होने तक प्रतीक्षा करें और फिर लिंक को कॉपी करके यहां पेस्ट करें”, “”)
Loss of policy surrender
The first disadvantage of policy surrender comes in the form of a reduction in the benefits of insurance. Second, if a consumer has discontinued the policy too early, he may have to bear the loss of the entire premium. At the same time, if the policy is discontinued in between, the consumer also has to pay surrender charges. Usually, the consumer gets a very small amount back on discontinuing the policy in between. If a subscriber closes the policy in the mid-term, he gets an amount equal to the sum of the amount allocated for savings and earnings. This is called the surrender value.
There are two types of surrender value
Life insurance policies have a guaranteed and special surrender value. Guaranteed Surrender Value can be given to the insured only after completion of 3 years from the date of commencement of premium. In this, the consumer gets only 30 percent of the premium paid till then. This does not include the first-year premium, the additional amount paid for the policy plus other benefits and bonuses.
Talking about Special Surrender Value, when the policyholder discontinues after paying the premium for a specified period, the policy continues, but the paid-up value is paid later. Now let us understand how the paid up value is calculated. It is determined by multiplying the total amount received on maturity under the policy by the quotient of the number of premiums paid and the total number of premiums for the entire term.
Understand your loss by example
For example, suppose a consumer at the age of 35 has taken a New Jeevan Anand policy of Rs 5 lakh for the next 20 years. Its annual premium will be around 30 thousand rupees annually. Now suppose the consumer has discontinued the policy after paying the premium for 3 years, then he will lose the entire amount deposited in three years. Now suppose the consumer asked the insurance company to convert the premium paid till now into paid-up, then the policy will continue. On this, the full amount will be available only on maturity. Now if a consumer surrenders the policy after paying a premium for 10 years, then he will get only Rs 81,000 after deducting the surrender charge out of 30 percent amount of Rs 3 lakh.
paid-up value = Years of Premium Payment / Maturity Period x Sum Assured + Bonus / 1000 x Sum-insured
surrender value = Surrender Value Factor x Paid Up Value / 100
Documents required for policy surrender
The policy surrender request form has to be filled out and submitted to the insurance company.
Along with this, original documents of the policy, and canceled checks also have to be submitted.
The KYC documents have to be self-attested and attached to the surrender form.
Not only this, but some important reasons for surrendering the policy will also have to be mentioned in the form.
After the submission of the surrender form, work starts on it in 10 days.