This LIC surrender value calculator computes the four numbers every policyholder needs before deciding to exit: your Guaranteed Surrender Value (GSV), your Special Surrender Value (SSV), the tax you will owe, and — most importantly — the opportunity cost of staying in the policy versus redirecting the remaining premiums to a mutual fund SIP. It uses the same IRDAI-mandated formulas LIC, SUD Life, HDFC Life, ICICI Prudential, and Bajaj Allianz use. For the official rules, see the regulator’s circulars at IRDAI and product-level disclosures at LIC of India.
Last updated: May 2026. Educational tool, not investment or insurance advice.
LIC Surrender Value Calculator
GSV, SSV, tax and opportunity-cost in one calculation. Works for LIC, SUD Life, HDFC Life, ICICI Prudential, Bajaj Allianz traditional plans.
Key Takeaways
- Your LIC surrender value is the higher of GSV (Guaranteed) and SSV (Special). For most policies surrendered after year 5, SSV wins by a wide margin.
- You cannot surrender in year 1. From year 2, you can — but the GSV factor starts at just 30% and rises slowly. Surrendering in years 2–4 typically returns less than half the premiums paid.
- If you surrender after 5 years, the entire payout is tax-free under Section 10(10D). Before 5 years, it is fully taxable at your income slab.
- Three exits, not two: surrender, paid-up, or continue. “Paid-up” freezes future premiums but keeps a reduced sum assured — often the most overlooked option.
- The single biggest question is opportunity cost: would the same money in an equity mutual fund SIP for the remaining term beat the policy’s maturity value? For traditional endowment policies, the answer is almost always yes.
What Is LIC Surrender Value?
The surrender value is the cash amount your life insurance company pays you when you voluntarily exit a policy before it matures. It is not the total premiums you paid back. It is a regulated formula-driven number that the insurer is contractually obliged to compute, with the higher of two values — GSV and SSV — handed over.
Every traditional Indian life policy — LIC, SUD Life, HDFC Life, ICICI Prudential Life, Bajaj Allianz, Tata AIA, Max Life, and others — uses the same IRDAI framework. ULIPs work differently and pay out the fund value minus surrender charges, which is why this calculator and guide focus on traditional endowment, money-back, and whole-life plans.
GSV (Guaranteed Surrender Value): Formula and Factors
GSV is the IRDAI-mandated minimum your insurer must pay. The formula is:
GSV = (Total premiums paid × GSV factor) + (Accrued bonus × GSV bonus factor)
Total premiums paid excludes the first-year premium. Service tax/GST also excluded.
GSV Factor Table (LIC, Endowment & Money Back, FY2026)
| Year of surrender | GSV factor (premiums) | GSV factor (bonus) |
|---|---|---|
| End of year 1 | 0% (cannot surrender) | 0% |
| End of year 2 | 30% | 0% |
| End of year 3 | 30% | 5% |
| End of year 4 | 50% | 10% |
| End of year 5–6 | 50% | 15% |
| End of year 7 | 50% | 20% |
| Years 8 onwards | 50%–55%, sliding | 20%–35%, sliding |
| Last 2 years of term | 90% | 40%–50% |
These are LIC’s standard factors. Some private insurers publish slightly different schedules, but all stay within IRDAI’s mandated minimum. Check your specific policy bond — the GSV factor table is printed in it.
SSV (Special Surrender Value): Where Insurers Pay More
SSV is the insurer’s discretionary payment — almost always higher than GSV after year 5. It is calculated on the “paid-up value” of your policy:
SSV = (Paid-up value + Accrued bonus) × SSV factor
Paid-up value = Sum Assured × (Years paid ÷ Total term)
The SSV factor is an internal table the insurer maintains, based on the policy’s age and the prevailing interest rate environment. It rises sharply as you approach maturity. For a typical 20-year endowment surrendered at year 10, the SSV factor is around 0.60–0.70. At year 17 it can be 0.90+. The calculator above uses an approximation of LIC’s published SSV table; for the exact number, request a “surrender value statement” from your nearest LIC branch or the customer portal.
Tax on LIC Surrender Value — Section 10(10D)
Indian income tax law treats surrender proceeds differently based on how long you held the policy. The rule lives in Section 10(10D) of the Income Tax Act.
- Surrender after 5 full premium-paying years — the entire surrender amount is fully tax-free under Section 10(10D), provided the policy met the premium-to-sum-assured ratio at issue (typically 10% for policies issued after April 2012).
- Surrender within 5 years — the surrender amount is fully taxable as “Income from Other Sources” at your slab rate. Plus, every 80C deduction you claimed in earlier years on the premium is reversed and added back to your income in the surrender year.
- Single-premium policies — if the single premium exceeded 10% of sum assured, the entire payout is taxable irrespective of holding period.
- Policies issued after Feb 2021 with premium > ₹5 lakh/year — taxable as per amended 10(10D) rules.
For most middle-class endowment policies (₹50,000–₹2 lakh annual premium, ₹5–₹50 lakh sum assured), the 10% premium-to-SA ratio is comfortably met, and surrender after year 5 is fully tax-free. The bigger trap is the 80C reversal — many people surrender in year 4 to “lock in” gains, forgetting that they will lose three years of tax savings to the reversal. Run the surrender date through the 5-year test before you act.
Surrender vs Paid-up — The Often-Overlooked Third Option
Most policyholders think there are only two choices: surrender now, or continue paying premiums. There is a third, often financially superior, option: make the policy paid-up.
A paid-up policy is one where you stop paying further premiums but do not surrender. The policy stays in force with a “reduced paid-up sum assured” calculated as Sum Assured × (Years paid ÷ Total term). The reduced SA plus any accrued bonus is paid out at the original maturity date, or on death if earlier.
| Action | Cash today | Future premium burden | Death benefit | Maturity benefit | Tax on exit |
|---|---|---|---|---|---|
| Continue paying | ₹0 | Full ongoing | Full SA | Full maturity | Exempt (if eligible) |
| Make paid-up | ₹0 | None | Reduced SA | Reduced maturity | Exempt at maturity |
| Surrender | GSV or SSV | None | Coverage stops | None | Depends on 5-year rule |
Paid-up is mathematically optimal when: (a) you have already crossed 5 years, (b) accrued bonus is meaningful, and (c) you do not need the cash. You give up some maturity value, but you avoid the SSV haircut and keep the residual life cover. Run the numbers in the calculator above with “continue” projected — if surrender + redirect beats it, then surrender + redirect also beats paid-up.
Worked Example: LIC Jeevan Anand, 7 Years In
A typical Indian policyholder scenario. You took a LIC Jeevan Anand policy seven years ago: ₹10 lakh sum assured, ₹50,000 annual premium, 20-year term, ₹1.2 lakh accrued bonus to date. You are considering surrender. Here is what the numbers say:
- Total premiums paid: ₹50,000 × 7 = ₹3.5 lakh
- Premiums for GSV (excluding first year): ₹3.0 lakh
- GSV factor at year 7: 50% on premium, 20% on bonus
- GSV: 3,00,000 × 0.50 + 1,20,000 × 0.20 = ₹1.74 lakh
- SSV (paid-up basis): Paid-up value = 10,00,000 × (7/20) = ₹3.5 lakh; SSV factor ~0.65; SSV ≈ (3,50,000 + 72,000) × 0.65 = ₹2.74 lakh
- Actual payout (higher of GSV/SSV): ₹2.74 lakh — a 22% loss versus premiums paid
- Tax: Year 7 means after 5 years, so exempt under 10(10D)
- Net in hand: ₹2.74 lakh
Now the opportunity-cost test. Take ₹2.74 lakh today, redirect the future ₹50,000/year for 13 more years to a Nifty 50 index SIP at 12%. The corpus at year 20: ₹2.74 lakh growing for 13 years at 12% = ₹11.94 lakh, plus the SIP of ~₹4,167/month for 13 years at 12% = ₹13.5 lakh. Total: ~₹25.4 lakh.
Versus continuing the policy: a typical Jeevan Anand at maturity returns the sum assured plus bonuses, roughly ₹17–20 lakh at year 20. The surrender + redirect path wins by ₹5–8 lakh — about 25–40% more wealth. This is the math that almost every traditional Indian endowment policy fails when held to maturity.
Surrender Value Across Major Insurers
LIC, SUD Life, HDFC Life, ICICI Prudential, and Bajaj Allianz all follow the same IRDAI framework, but their internal SSV tables and surrender approval processes differ. The calculator above uses approximations that work across these insurers; for the exact number, always pull a “surrender value statement” from the specific insurer.
- LIC of India — most generous SSV factors above year 10 (state-backed pool). Surrender online via the LIC customer portal or any branch. T+10 working days typical.
- SUD Life (Star Union Dai-ichi) — uses IRDAI minimum SSV plus a 5–10% top-up. Online surrender available via portal. SUD Life website has the policy-specific factor.
- HDFC Life — comparable SSV to LIC after year 7; tighter in early years. Strong online process via the HDFC Life portal.
- ICICI Prudential Life — published SSV factors on their website, generally aligned with industry. Faster T+5 processing.
- Bajaj Allianz — uses a transparent SSV grid; among the better insurers for early-year SSV.
- Tata AIA, Max Life, Aviva, Aditya Birla Sun Life — all follow IRDAI minimum, with insurer-specific tops.
The differences across insurers are typically 3–8% at the same year, not life-changing. The bigger lever is the surrender year (after vs before year 10) and the opportunity-cost decision (continue vs redirect).
How to Surrender Your LIC Policy Online
- Pull the latest surrender value statement. Log into the LIC customer portal (or the relevant insurer’s portal) and download the policy status report. The current GSV and SSV figures are printed.
- Decide: surrender, paid-up, or continue. Run the calculator above with your real numbers and the decision framework block.
- Fill the surrender form. LIC’s form is called Form 5074. Download from the LIC portal, fill, sign, and attach to your KYC.
- Submit at your servicing branch or online. For LIC, in-person submission at the branch where the policy is serviced is fastest. Some private insurers allow full online surrender.
- Attach KYC and bank details. PAN, Aadhaar, cancelled cheque, latest premium receipt, original policy document (or a notarised indemnity if lost).
- Wait for credit. LIC typically credits the surrender amount to your bank account in 7–15 working days. Private insurers are faster, often 3–7 days.
- File the right tax return. If surrender happened within 5 years, report the proceeds under “Income from Other Sources” in your ITR, and reverse any 80C deductions claimed previously.
5 Common Mistakes When Surrendering a Life Insurance Policy
- Surrendering in year 4 to “stop the bleed”. You lose three years of 80C reversal plus the SSV is still poor. Wait one more year — the tax flip alone justifies it.
- Ignoring the paid-up option. If you cannot stomach the surrender haircut but cannot afford the premium, paid-up keeps a residual cover with zero further outflow.
- Comparing surrender value to premiums paid only. The right comparison is surrender + SIP redirect vs continued premium + maturity. Almost always, the redirect wins for endowment plans.
- Stopping term life cover at the same time. Endowment surrender often leaves you under-insured. Buy a pure term insurance plan for the right sum before you surrender, not after.
- Forgetting the bonus loyalty. Some LIC plans have terminal bonuses paid only at maturity. Surrendering 2 years before maturity can mean leaving a meaningful amount on the table.
LIC Surrender Value Calculator: Frequently Asked Questions
How is LIC surrender value calculated?
The surrender value is the higher of GSV (Guaranteed Surrender Value) and SSV (Special Surrender Value). GSV uses IRDAI-mandated factors applied to total premiums paid (excluding the first year) plus a factor on accrued bonuses. SSV uses the paid-up value of the policy multiplied by an insurer-specific SSV factor. For most policies past year 5, SSV is higher and is the amount paid out.
Is LIC surrender value taxable?
If you surrender after 5 full premium-paying years, the surrender amount is fully tax-free under Section 10(10D). If you surrender within 5 years, the entire amount is taxable as “Income from Other Sources” at your slab rate, and the 80C deductions you claimed in earlier years on the premium are reversed and added back to your income.
Can I surrender my LIC policy in the first year?
No. Traditional Indian life policies require at least 2 full years of premium payment before any surrender value accrues. In year 1, your only option is to let the policy lapse — but you will receive nothing back. The “free-look period” of 15–30 days at policy issue is the only window in year 1 where you can exit and get most of your premium back.
What is the difference between GSV and SSV?
GSV is the IRDAI-mandated minimum the insurer must pay; SSV is what the insurer typically pays in practice, usually higher. Both are calculated for every surrender request and the higher amount is credited. SSV exceeds GSV in almost all cases after the first 5–7 years.
Should I surrender my LIC policy or make it paid-up?
If you need the cash now, surrender. If you do not need the cash and want to stop paying premiums but keep some life cover, make it paid-up. If you want to maximise wealth, run the opportunity-cost test in the calculator — for most endowment policies, surrender + equity SIP redirect beats both continuing and paid-up.
How is SUD Life surrender value calculated?
SUD Life (Star Union Dai-ichi) uses the same IRDAI framework as every other Indian life insurer — GSV and SSV with the higher number paid out. Their SSV factors are typically aligned with the industry, with a 5–10% top-up over the IRDAI minimum after year 5. Request a surrender value statement from the SUD Life customer portal for your specific policy number.
Does the surrender value include the accrued bonus?
Yes, but partially. The accrued reversionary bonus is multiplied by a bonus-specific factor (typically 5–50% depending on year of surrender) before being added to the GSV. SSV includes a higher portion of bonus, usually 60% or more after year 7. Final additional/terminal bonuses are paid only at maturity and are forfeited on surrender.
How long does LIC take to credit the surrender amount?
LIC of India typically credits the surrender amount to your bank account in 7–15 working days after the surrender form is received and verified. Private insurers like HDFC Life, ICICI Prudential, and Bajaj Allianz are generally faster — 3–7 working days. Track the request via the insurer’s portal or customer care.
Can I surrender a LIC policy online?
Partially. LIC of India accepts online surrender requests via the customer portal for some policies, but most still require physical submission at the servicing branch with KYC and original policy bond. Private insurers like HDFC Life and ICICI Prudential offer fully digital surrender for most plans. Check your insurer’s portal for the latest digital surrender support.
What is the surrender value of a money-back policy?
Money-back policies use the same GSV/SSV formulas, but adjusted for the survival benefits already paid out. The surrender value is calculated on the remaining sum assured (original SA minus survival benefits already paid). This typically reduces the SSV by 15–25% compared to a pure endowment of the same size.
Related Tools and Reads
- CAGR Calculator — find the real annualised return on your policy
- FIRE Calculator India — full financial independence corpus
- Crorepati Calculator — what your redirected SIP will become
- SIP vs lump sum — best way to deploy your surrender amount
- Direct vs Regular mutual funds — minimise expense drag on the redirect
- How to choose the best mutual fund — 7-step framework
- Stock market taxation in India — tax on the new equity portfolio
- HRA Calculator — Section 10(13A) exemption
About the author. Mithun Srivastava is a personal finance educator and the founder of investwithmithun.com. He has been studying Indian life insurance products for 15+ years and writes practical, math-first guides for retail investors. This calculator uses IRDAI-mandated formulas and industry-standard SSV approximations; for your exact surrender value, always request a current surrender value statement from your specific insurer. This is educational content, not insurance or investment advice.