What is meant by Surrender Value of a policy?

Recently, I wanted to return an insurance policy which I had bought five years ago, but was told that the Surrender Value of the policy was way below the actual premium amount that I had paid.

Can anyone explain on what basis is this value calculated? And does the market situation impact the value at the time of surrender of the policy?

Written by Category: Personal Finance 10 years ago
Kalyani Nandurkar

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The surrender value is the amount receivable to you at the time of you surrendering the policy. if you surrender the policy in the first three years the surrender value is zero. In your case you have given only the year details but valuable data like your premium amount, mode of payment, when you have taken the policy and is there any pending premiums, bonus declared by insurance company on that policy etc are not given. Then only one can calculate the surrender value of the policy.

I have provided one link below to calculate the surrender value. Click the first link to calculate with it, and NO market situation generally not affect surrender value.




A surrender is a voluntary termination of the contract, by the policyholder. The amount payable by the insurer to the policyholder on surrender, is called the Surrender Value or you can say cash value

The surrender value is usually a percentage of the premiums paid. The percentage increases as the duration of the policy increases.  If the premiums are being paid regularly, the surrender value will go on increasing and would be more than the outstanding loan and interest at any point of time. The actual surrender value will be higher than the guaranteed surrender value.


Sunny Singh

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