Insurance Policy Surrender value Calculator (fill only cells in green)

This calculator is based on LIC surrender value factors, is not suitable for ULIPS and single-premium plans
and is merely indicative of the expected surrender or paid-up value
Premium payment mode (choose from drop-down list)
Policy Term
Total number of premiums payable
Years after which surrender value becomes applicable (usually 3 years)
Years premium paid (enter whole number only. If paid of 5.5 years enter only 5)
Sum Assured (SA)
Number of premiums paid (ex. Enter 22 if you have paid quarterly premiums for last 5.5 years)
You need to ensure number of premiums paid is less than total no of premiums payable
You also need to ensure number of premiums paid correlates with years premium paid
Premium amount excluding riders (needed only for guaranteed surrender value!)
Total premium amount including riders). Re-enter even if same as above.
Surrender value factor (years premium paid is rounded off. For ex. 22 Qtly premiums is taken as 5 years)
Bonus received so far: Bonus is declared as a bonus rate. That is amount per Rs. 1000 of sum assured.
This is declared each year. you could enter this in the adjoining columns (D and E)
If you dont know the Bonus rate received enter an approx. average bonus rate for all policy years
Paid-up Value (you stop paying premiums and this is the amount you get when the policy matures)
Paid-up Value if applicable with no bonus
Paid-up Value if applicable for average bonus rate as entered above
Paid-up Value if applicable with annual bonus info as entered in columns D and E
Guaranteed Surrender value percentage (at present 30% soon to be enhanced to 50% or so)
Guaranteed Surrender value (GSV)
Partial bonus will be added to the GSV. Amt of partial bonus is usually not made public. Not incl. in calculation
Special Surrender Value (SSV) if applicable with no bonus
Special Surrender Value (SSV) if applicable for average bonus rate as entered above
Special Surrender Value (SSV) if applicable with annual bonus info as entered in columns D and E
If SSV is greater than GSV (usually the case) you will paid be SSV and vice-versa
Is the surrender value taxable?
Taxable if annual premium greater than 20% of sum assured if policy is issued on or after 1-4-2003 (I have used this)
Taxable if annual premium greater than 10% of sum assured if policy is issued on or after 1-4-2012
Taxable if annual premium greater than 5% of sum assured if policy is issued after DTC kicks in
http://capitalmind.in/2012/03/insurance-full-tax-on-surrender-if-premium10-of-sum-assured/
What about 80 C deductions made based on this policy in previous years?
If you surrender before 5 years then such deductions become invalid and will be treated as income!
You will need to pay tax for this amount in the year of surrender.
http://taxworry.com/what-you-must-know-about-tax-impact-on-surrender-of-insurance-policy/
(this site will force you to share the article on FB, Twitter etc. but it is worth it!)
Paid-Up Vs Surrender
enter the paid-up from above with which you would like to make the comparison
enter the SSV (or GSV if that is greater) from above with which you would like to make the comparison
tax-slab (choose from drop down list 10% or 20 % or 30%) (includes education cess)
Net SSV available for investement if policy is surrendered
You will get the paid-up value after (years)
Instead of making the policy paid-up if you surrender and invest the post-tax SSV for the same duration as above
then for the investment to generate a sum equal to the paid-up value the post-tax rate of return required is

So what should you do?

If your policy has more than 5 years left then you could invest a good portion of the SSV in equity instruments
or a balanced mutual fund and expect about 10% return which is tax-free (as of now)
if your policy has less than 5 years left then best would be pay premiums for the full terms
So the question of paid-up or surrender arises only for policies which are many years away from completion.
For such polices if the above post-tax return is in single digits and the policy term has about 10 years left
then surrendering makes sense. If the above post-tax return is above or close to 10% then you could
just make the policy paid-up. If the post-tax return required is a low single digit number then if you surrender
and invest intellgently you could earn more than the paid-up value.
Finally when should consider either paid-up or surrender options in the first place?
Case a
If you have planned your goal properly taking inflation into account and calculate the amount need to be saved each year
or each month and then buy a life insurance product with an approximate idea of how you will get upon maturity and
whether that would be enough for your goals, then and only then you should continue your policies. This scenario also
assumes you have enough money to meet all your financial goals, contingencies, expenses, loans and that
you have adequate life and health insurance! (unfortunately this is pretty rare if not impossible!)
Case b
Say you need to save Rs. 10,000 each month for a goal and you have an insurance product with an (effective)
monthly premium of only Rs. 2,000 then you could continue the policy. Of course you need to invest the rest of the money
in appropriate instruments. The policy can serve as a debt instrument offering you limited but guaranteed tax-free
returns. If your effective monthly premium is close to or more than Rs. 10,000 and if case a is satisfied then
you could continue. If not then consider paid-up or surrender options as above and invest wisely
After realising that the insurance product is unsuitable for your goal dont rush to get it paid-up or surrender
If you have paid premium for only one or two years. Get out of it and minimize your loss
if you have paid for three years then make it paid-up if you have claimed 80C deductions with the policy
If you have paid for five years or more then decide using the above calculator to choose between paid-up
and surrender options. If the policy is close to completion then leave it be. Calculate how much you need for the
goal, estimate the short-fall and prepare accordingly.

yearly
20
20
3
4
1000000
4

15000
15000
30.06

50

200000
400000
400000
30%
13500

60120
120240
120240
No
have used this)

400000
120240
20.6%
120240
16
7.8%

The (LIC) bonus rate is usually been well below Rs. 100. Bonuses constitute simple interest
The bonuses given each year are simply added up. Longer the policy duration more the bonus.
Bonuses for whole-life plans are more than endowment plans which in turn is more than money-back plans
Have a look at this for a comparison and bonus rates for last few years
http://basunivesh.com/2012/09/05/lics-bonus-rates-for-2012-13-and-comparision/
For a 20 year whole life plan I would not expect more than Rs. 70 per Rs. 1000 SA each year
For a 20 year endowment plan I would not expect more than Rs. 40-45 per Rs. 1000 SA each year
For a 20 year money-back plan I would use about Rs. 30-40 per Rs. 1000 SA each year
Loyalty additions are paid if applicable only after certain number of years dependent on the policy and are usually
in the same format as the bonus rate every 5 years or so. This is not included in the surrender value calculation
at present as my understanding is that loyalty addition do not apply to surrender/paid-up options.
Another type of bonus called final additional bonus if applicable is usually paid after 15 years. This also is not inclu
the calculation
Year Bonus Rate
1
50
If entries in column E
2
50
are more than the number
3
50
of years premium paid
4
50
they will be ignored
5
If entries in column E
6
are less than the number
7
of years premium paid
8
bonus rate of remaining
9
years of premum paid
10
will be taken as zero
11
12
13
14
15
16
17
18
19
20

be saved each year

n maturity and
his scenario also

he rest of the money

ore the bonus.

ore than money-back plans

SA each year
1000 SA each year

dent on the policy and are usually declared

n the surrender value calculation
paid-up options.
ter 15 years. This also is not included in

years
premium
paid
1
1.5
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29

Term
5

61.8
67.34
73.39

58.13
63.34
69.03
75.23

54.66
59.55
64.89
70.71
77.06

51.96
55.97
60.98
66.44
72.4
78.9

49.56
53.18
57.28
62.4
67.98
74.08
80.73

10
44.52
45.97
47.43
50.7
54.4
58.59
63.82
69.53
75.76
82.57

11

12

45.52
48.49
51.84
55.62
59.9
65.24
71.08
77.45
84.4

43.83
46.53
49.57
52.98
56.84
61.21
66.67
72.63
79.13
86.24

13

14

15

16

17

18

19

20

21

41.52
44.78
47.54
50.64
54.12
58.06
62.52
68.09
74.18
80.82
88.07

39.34
42.42
45.74
48.56
51.72
55.27
59.29
63.83
69.52
75.73
82.5
89.91

37.27
40.18
43.32
46.71
49.58
52.79
56.42
60.51
65.15
70.95
77.28
84.19
91.74

34.62
37.31
40.22
43.35
46.74
49.61
52.82
56.44
60.53
65.17
70.96
77.29
84.19
91.74

32.17
34.66
37.36
40.26
43.4
46.78
49.64
52.86
56.47
60.56
65.19
70.98
77.3
84.2
91.74

29.92
32.23
34.72
37.41
40.31
43.45
46.83
49.69
52.9
56.51
60.59
65.22
71
77.331
84.2
91.74

27.84
29.98
32.29
34.78
37.47
40.37
43.5
46.88
49.74
52.94
56.55
60.63
65.24
71.02
77.33
84.22
91.74

25.93
27.91
30.06
32.37
34.86
37.54
40.44
43.57
46.94
49.8
53
56.6
60.67
65.28
71.04
77.33
84.22
91.74

24.17
26.01
28
30.14
32.45
34.94
37.62
40.52
43.64
47.02
49.87
53.07
56.66
60.72
65.31
71.06
77.34
84.22
91.74

22

22.55
24.26
26.11
28.1
30.24
32.55
35.03
37.72
40.61
43.74
47.1
19.95
53.14
56.72
60.777
65.35
71.09
77.36
84.22
91.74

23

24

25

26

27

28

29

30

22.66
24.37
26.22
28.21
30.35
32.65
35.14
37.83
40.72
43.84
47.2
50.04
53.22
56.79
60.82
65.39
71.12
77.38
84.23
91.74

21.18
22.78
24.49
26.34
28.33
30.47
32.78
35.27
37.95
40.84
43.96
47.31
50.14
53.31
56.87
60.89
65.44
71.15
77.39
84.23
91.74

19.83
21.31
22.91
24.63
26.48
28.47
30.61
32.92
35.42
38.1
40.98
44.09
47.43
50.25
53.4
56.95
60.95
65.49
71.19
77.41
84.24
91.74

18.59
19.97
21.46
23.06
24.78
26.64
28.63
30.78
33.09
35.58
38.26
41.14
44.23
47.57
50.37
53.51
57.04
61.03
65.55
71.22
77.44
84.25
91.74

17.46
18.75
20.14
21.63
23.23
24.96
26.82
28.81
30.97
33.26
35.77
38.44
41.31
44.39
47.17
50.5
53.63
57.14
61.11
65.61
71.27
77.46
84.26
91.74

16.42
17.63
18.93
20.32
21.82
23.43
25.16
27.02
29.02
31.18
33.49
35.97
38.63
41.6
44.57
47.87
50.65
53.76
57.25
61.2
65.68
71.31
77.49
84.27
91.74

15.48
16.61
17.82
19.13
20.53
22.03
23.65
25.38
27.25
29.26
31.41
33.72
36.2
38.85
41.7
44.76
48.05
50.81
53.9
57.37
61.3
65.76
71.36
77.52
84.28
91.74

14.62
15.68
16.82
18.04
19.35
20.76
22.27
23.89
25.64
27.51
29.53
31.67
33.98
36.44
39.09
41.92
44.97
48.24
50.98
54.05
57.5
61.41
65.84
71.42
77.55
84.29
91.74

1
1.5
2
3
4
5
6
7
8
9
10
11
12

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

3
4
5
6
7
8
9
10
11
12
13
14
15
16

61.8
67.34
73.39

58.13
63.34
69.03
75.23

54.66
59.55
64.89
70.71
77.06

51.96
55.97
60.98
66.44
72.4
78.9

49.56
53.18
57.28
62.4
67.98
74.08
80.73

14
39.34
42.42
45.74
48.56
51.72
55.27
59.29
63.83
69.52
75.73
82.5
89.91

15
37.27
40.18
43.32
46.71
49.58
52.79
56.42
60.51
65.15
70.95
77.28
84.19
91.74

16
34.62
37.31
40.22
43.35
46.74
49.61
52.82
56.44
60.53
65.17
70.96
77.29
84.19
91.74

17
32.17
34.66
37.36
40.26
43.4
46.78
49.64
52.86
56.47
60.56
65.19
70.98
77.3
84.2
91.74

18
29.92
32.23
34.72
37.41
40.31
43.45
46.83
49.69
52.9
56.51
60.59
65.22
71
77.331
84.2
91.74

23
22.66
24.37
26.22
28.21
30.35
32.65
35.14
37.83
40.72
43.84
47.2
50.04
53.22
56.79

24
21.18
22.78
24.49
26.34
28.33
30.47
32.78
35.27
37.95
40.84
43.96
47.31
50.14
53.31

25
19.83
21.31
22.91
24.63
26.48
28.47
30.61
32.92
35.42
38.1
40.98
44.09
47.43
50.25

26
18.59
19.97
21.46
23.06
24.78
26.64
28.63
30.78
33.09
35.58
38.26
41.14
44.23
47.57

27
17.46
18.75
20.14
21.63
23.23
24.96
26.82
28.81
30.97
33.26
35.77
38.44
41.31
44.39

10
44.52
45.97
47.43
50.7
54.4
58.59
63.82
69.53
75.76
82.57

11

12

45.52
48.49
51.84
55.62
59.9
65.24
71.08
77.45
84.4

43.83
46.53
49.57
52.98
56.84
61.21
66.67
72.63
79.13
86.24

19
27.84
29.98
32.29
34.78
37.47
40.37
43.5
46.88
49.74
52.94
56.55
60.63
65.24
71.02
77.33
84.22
91.74

20
25.93
27.91
30.06
32.37
34.86
37.54
40.44
43.57
46.94
49.8
53
56.6
60.67
65.28
71.04
77.33
84.22
91.74

21
24.17
26.01
28
30.14
32.45
34.94
37.62
40.52
43.64
47.02
49.87
53.07
56.66
60.72
65.31
71.06
77.34
84.22
91.74

28
16.42
17.63
18.93
20.32
21.82
23.43
25.16
27.02
29.02
31.18
33.49
35.97
38.63
41.6

29
15.48
16.61
17.82
19.13
20.53
22.03
23.65
25.38
27.25
29.26
31.41
33.72
36.2
38.85

30
14.62
15.68
16.82
18.04
19.35
20.76
22.27
23.89
25.64
27.51
29.53
31.67
33.98
36.44

17
18
19
20
21
22
23
24
25
26
27
28
29

60.82
65.39
71.12
77.38
84.23
91.74

56.87
60.89
65.44
71.15
77.39
84.23
91.74

53.4
56.95
60.95
65.49
71.19
77.41
84.24
91.74

50.37
53.51
57.04
61.03
65.55
71.22
77.44
84.25
91.74

47.17
50.5
53.63
57.14
61.11
65.61
71.27
77.46
84.26
91.74

44.57
47.87
50.65
53.76
57.25
61.2
65.68
71.31
77.49
84.27
91.74

41.7
44.76
48.05
50.81
53.9
57.37
61.3
65.76
71.36
77.52
84.28
91.74

39.09
41.92
44.97
48.24
50.98
54.05
57.5
61.41
65.84
71.42
77.55
84.29
91.74

13

41.52
44.78
47.54
50.64
54.12
58.06
62.52
68.09
74.18
80.82
88.07
22
22.55
24.26
26.11
28.1
30.24
32.55
35.03
37.72
40.61
43.74
47.1
19.95
53.14
56.72
60.777
65.35
71.09
77.36
84.22
91.74