When you purchase a LIC medical or health insurance policy, like LIC’s Jeevan Arogya or Mediclaim, and you don’t end up making any claims, it’s only natural to ask yourself: Can I get my money back? Are there any benefits to it? And when’s the right time to surrender or exit the policy?
Surrender Value: What You Can Expect
For most traditional LIC life or health policies, if you decide to surrender them (which means ending the policy before it matures), you can usually qualify for something called the Surrender Value after you’ve paid premiums for about 2 to 3 full years.
- Guaranteed Surrender Value (GSV): This typically amounts to around 30% of the total premiums you’ve paid, not counting the first-year premium or any rider-related premiums.
- Special Surrender Value (SSV): This may include any bonuses you’ve accrued and is generally higher, but you’ll receive whichever is greater between GSV and SSV.
For example (based on LIC’s policy data):
Using a surrender-value calculator, if you’ve paid ₹342,980 in premiums over 20 years, the Total GSV with vested bonuses could be around ₹2,72,106, while the SSV might be ₹2,55,678. In this case, you’d get the higher amount, which is ₹2.72 lakh.
No-Claim Benefit (Specific to Medical Plans)
Certain health plans, like LIC’s Jeevan Arogya, come with a No-Claim Benefit (NCB). For every policy year that goes by without any claims, the applicable daily benefit increases by 5% of the initial daily benefit. This benefit can keep building up without any cap.
However, it’s important to note that NCB doesn’t mean you’ll get cash back or a surrender value. Instead, it boosts your coverage for future hospital claims, making it quite valuable, just not in terms of immediate cash.
Best Time to Surrender / Exit & Invest Elsewhere
When it comes to getting the most out of your money:
- If you surrender your policy too soon (like within the first 2–3 years), you might end up with a pretty disappointing return, or even none at all.
- But as time goes on, the surrender value can really start to climb potentially hitting 50–90% of the premiums you’ve paid (this can vary based on bonuses, the type of policy, and so on).
If you’re thinking about investing your money elsewhere, here are a few things to keep in mind:
- Try to hold onto the policy for at least 5–10 years to really boost that surrender value (especially if there are bonuses involved).
- Consider a paid-up option, which lets you stop paying new premiums while still keeping some coverage, so you don’t have to worry about extra costs.
- Make sure to weigh the expected returns against other investment options (for instance, mutual funds typically offer an 8–12% annual return) remember, medical coverage tends to be more secure than just chasing growth.
Summary Table
| Topic | Key Insight |
|---|---|
| Surrender Value | Available after 2–3 years; 30%+ of premiums (excluding 1st year); higher later |
| No-Claim Benefit | Adds 5% of daily benefit annually in health plans, increasing future coverage |
| Best Time to Surrender | After 5–10 years to maximize cash; earlier is poor value |
| Alternatives | Paid-up option retains coverage at lower cost, or invest premium in funds |