Procedure: How to Surrender Insurance Policy
January 30 , 2013
January 30 , 2013
- If ever you decide to discontinue an existing endowment or money back policy the insurance company is liable to pay you a certain amount called as surrender value. This amount is payable only if you discontinue after three full years premium is paid up, unless it is a single premium policy which you can surrender after the first year.
- Surrender value of policies are regretfully very low compared to the amount you would've paid as premiums. Yet if you are convinced that the existing policy is a miserable mistake, then go ahead and surrender it and get a better one instead. It may be possible to protect your money from further drain and get your insurance need better addressed through a different policy.
- Check if your policy has surrender value. Read through the policy document to find out. Term plans do not accrue any surrender value.
- Let's face it- this is one of the activities the insurance company will not be happy to guide you along. Hunt for the Surrender Request form/letter on their website. Fill in all details such as policy number, number of years of premium paid, etc.
- Most companies will issue a cheque against your bank account. Provide correct account details and attach a cancelled cheque with IFSC code or attach copy of bank statement/pass book not more than 6 months old. They might require bank's verification seal for your account number in the surrender request form.
- Submit this form along with original policy document, photocopies of premium payment receipts, latest unit balance (in case of ULIPs) to the branch from where the policy was purchased. In case of LIC policies you would have to fill in LIC form no 3510/5074 and affix revenue stamp. The policy holder must go in person to submit the documents.
- After verification by the officer wait for the cheque to reach your address. This might take anywhere between 15-30 days. If there is change in address bring it to their notice before hand. Verify that your name and account number are printed correctly on the cheque. Deposit cheque at your bank.
- Don't be underinsured or worse, uninsured. One good term insurance policy will take care of your life insurance need. Similarly get your entire family covered under a single mediclaim policy. A critical illness policy might also be a necessity. Apart from these, most people do not require any other forms of life insurance policies.