A life insurance policy is a good way to invest and also acts as protection for your entire family.
However, sometimes situations arise that make it hard to continue paying the premiums.
This breaks the chain of regular payments. In such cases, policyholders can now surrender their policy easily and get a refund. Earlier, there was no such option.
If you have a life insurance policy but need to stop it before the term ends, now you will get more money back than before.
Last year, the insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) made important changes to the rules about surrender value (the money you get when you surrender a policy). These changes will take effect from 1 October 2024.
You will get money if you surrender your policy
If a customer closes their insurance policy early, insurance companies must now pay a Special Surrender Value (SSV).
This means you will get more money back than before when you surrender the policy. This rule applies to all endowment policies.
Now, surrendering a policy has become easier, and you can leave the policy without much loss. Also, you have the option to switch to another plan.
Also read | How to close the PAN card of the deceased after their death?
Here is how it is calculated
For example, if the sum assured is Rs 5 lakh for 10 years and you pay a premium of Rs 50,000, but stop the policy after one year, you will get a refund.
If the insurance company has received the full year’s premium, the policyholder will get Rs 31,295 back.
