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LIC Jeevan Labh 836 Surrender Value Calculator

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Investing in life insurance, while being a long-term commitment, offers a strategic balance of protection and growth over the years. A standout plan to consider in this context is the LIC Jeevan Labh 836, which is a unique offering from the Life Insurance Corporation of India.

However, there can be circumstances where you may wish to discontinue your policy. In such cases, understanding your policy's surrender value becomes crucial to your financial planning.

To facilitate this process, we've come up with an in-depth guide detailing the LIC Jeevan Labh 836 surrender value for you. Our aim is to cover all the relevant details and make your calculations simpler so that you can make informed decisions about your life insurance policy.

What is the Surrender Value of LIC Jeevan Labh 836?

Surrender value represents the funds that you are eligible to receive upon the voluntary termination of your existing insurance policy. In scenarios where you have concerns about your ongoing plan and aim to end it while still retaining a portion of the benefits, surrendering your policy can emerge as a viable option. Specifically, the LIC Jeevan Labh 836 policy begins accruing a surrender value after the successful completion of three policy years.

A notable characteristic of LIC Jeevan Labh 836 is that it falls under the category of participating or with-profit policies. This means that policyholders are entitled to bonuses (as per the company’s profits), which are added to the surrender value upon discontinuation of the policy.

What Factors You Should Keep in Mind When Surrendering Your Active Policy?

When considering the surrender of your active insurance policy, several factors should be given careful thought -

  • Premium Payments: It's important to remember that with LIC, surrender value is only eligible for a payout if you've made premium payments for at least 3 full years.
  • Policy Add-Ons: Add-ons or riders attached to your primary policy do not accumulate any surrender value. Consequently, you won't receive any payout from these if you decide to surrender your policy.
  • Bonus Accumulation: The surrender value also accounts for the simple reversionary bonuses you've accrued - these are payable upon surrender of the policy.
  • Surrender Value Determinant: The calculation of your final surrender value is influenced by the 'surrender value factor', a variable determined by the term length of your policy and the policy year in which the surrender takes place.

Types of Surrender Value

If a policyholder decides to surrender their policy before it reaches maturity, they are eligible for two categories of surrender values -

1. Guaranteed Surrender Value (GSV) - This value is computed by multiplying the aggregate of the premium amounts (paid until the point of surrender) by the guaranteed surrender value factor (specific to the total premiums paid).

The table below outlines the GSV factors for premiums under LIC Jeevan Labh 836 -

Policy Year 16 years 21 years 25 years
1 0% 0% 0%
2 0% 0% 0%
3 30% 30% 30%
4 50% 50% 50%
5 50% 50% 50%
6 50% 50% 50%
7 50% 50% 50%
8 53.75% 52.3% 51.8%
9 57.5% 54.6% 53.5%
10 61.25% 56.9% 55.3%
11 65% 59.2% 57.1%
12 68.75% 61.5% 58.8%
13 72.5% 63.8% 60.6%
14 76.25% 66.2% 62.4%
15 80% 68.5% 64.1%
16 80% 70.8% 65.9%
17 N/A 73.1% 67.6%
18 N/A 75.4% 69.4%
19 N/A 77.7% 71.2%
20 N/A 80% 72.9%
21 N/A 80% 74.7%
22 N/A N/A 76.5%
23 N/A N/A 78.2%
24 N/A N/A 80%
25 N/A N/A 80%

2. Special Surrender Value (SSV) - This value is calculated by multiplying the SSV factor by the sum of the paid-up sum assured and the accrued bonuses. The SSV factor is periodically announced by LIC and can only be determined at the moment of policy surrender.

Apart from these two types, bonuses also attain a surrender value. The surrender value pertaining to simple reversionary bonuses is calculated by multiplying the accumulated bonuses by the surrender value factor (applicable under accrued bonuses).

Here are the GSV factors for bonuses under LIC Jeevan Labh 836 -

Policy Year 16 years 21 years 25 years
1 0% 0% 0%
2 0% 0% 0%
3 17.58% 15.93% 15.28%
4 17.66% 16.22% 15.42%
5 17.85% 16.58% 15.55%
6 18.16% 17.03% 15.72%
7 18.6% 17.58% 15.93%
8 19.18% 17.58% 16.22%
9 19.93% 17.66% 16.58%
10 20.85% 17.85% 17.03%
11 21.99% 18.16% 17.58%
12 23.38% 18.60% 17.58%
13 25.05% 19.18% 17.66%
14 27.06% 19.93% 17.85%
15 30% 20.85% 18.16%
16 35% 21.99% 18.6%
17 N/A 23.38% 19.18%
18 N/A 25.05% 19.93%
19 N/A 27.06% 20.85%
20 N/A 30% 21.99%
21 N/A 35% 23.38%
22 N/A N/A 25.05%
23 N/A N/A 27.06%
24 N/A N/A 30%
25 N/A N/A 35%

Understanding LIC Jeevan Labh 836 Surrender Value through an Example

Let's make this concept clearer by taking a practical example.

We'll consider a hypothetical policyholder named Abhinav who invested in LIC's Jeevan Labh policy with a sum assured of Rs.10 Lakhs. He chose a policy term of 21 years and the annual premium for this plan amounted to approximately Rs.48,000.

In this case, let's suppose the bonus rate offered by LIC is Rs.50 per thousand sum assured. Remember, this is purely illustrative and may not reflect actual terms.

After diligently paying premiums for 6 consecutive years, Abhinav decides to surrender his policy.

Here's how we would calculate the surrender value that Abhinav is entitled to at this juncture:

  1. Total Premium Paid: Abhinav has paid 6 annual premiums, which amounts to Rs.2,88,000 (6 x Rs.48,000).
  2. Surrender Value Factor for Premiums: From the guaranteed surrender value table for total premiums paid, we see that the surrender value factor for the 6th policy year is 50%. Thus, Abhinav’s surrender value of premiums equals Rs.2,88,000 x 50%, which is equal to a figure of Rs.1,44,000.
  3. Bonus Calculation: With a bonus rate of Rs.50 per thousand sum assured, the total bonuses for 6 years amount to Rs.3,00,000 [(50 x 10,00,000/1,000) x 6].
  4. Surrender Value Factor for Bonuses: Referring to the guaranteed surrender value table for bonuses, the surrender value factor for bonuses received during the 6th policy year is 17.03%.

Consequently, the surrender value of the bonuses equals Rs.3,00,000 x 17.03%, which comes to approximately Rs.51,090.

By combining the surrender values of the premiums and bonuses (Rs.1,44,000 + Rs.51,090), we arrive at a total surrender value of Rs.1,95,090. This amount would be the guaranteed surrender value payable to Abhinav by LIC upon the termination of his policy.

To Conclude

Understanding the surrender value of an insurance policy such as the LIC Jeevan Labh 836 is crucial for you as a policyholder. It's an essential aspect that comes into play if you decide to discontinue the policy before its maturity. This article has provided detailed insights into how the surrender value of this policy is calculated and the key factors that you should keep in mind before making such a decision.

Remember, surrendering a policy is a significant decision and should be made after a thorough evaluation of all relevant factors and implications. And while these figures provide a broad understanding, you are always encouraged to reach out to your insurance provider for the most accurate and up-to-date information.

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