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How to Surrender an IndiaFirst Life Insurance Policy?
IndiaFirst Life Insurance is one of India’s largest life insurance providers. Life insurance is a long-term investment, but unforeseen circumstances may require a policyholder to surrender their policy before the selected policy term ends. In such cases, the insurer pays a surrender value, and the coverage is terminated.
Remember that the amount policyholders receive after surrendering a policy is proportionately lower than the total premium paid. The IndiaFirst surrender value can only be estimated after policyholders have continuously paid premiums for three years.
Eligibility to Surrender an IndiaFirst Policy
Specific rules apply when surrendering a policy. Each policy has its own terms and conditions, so it's advisable to read them thoroughly before making a final decision. The period for surrendering a policy may vary from one plan to another based on policy tenure and premium payment. Here is the average period to surrender an IndiaFirst policy:
Under Single Premium Plan
A single premium insurance plan is a special plan where an insured person pays the entire premium once at the time of buying the policy. If you are a single premium plan policyholder, you can surrender your policy at least two years after the policy issue date.
Under Limited Period and Regular Premium Plan
There are differences in the terms and conditions of policies under limited period and regular premium plans. The following general details are provided:
- The policy surrender period is two years if the policy term is ten years or less.
- If the policy term is more than ten years, the minimum surrender period is three years.
Steps to Complete the Surrender Process
To surrender your IndiaFirst Life Insurance Policy, follow the steps mentioned below:
Documents Required for Surrendering an IndiaFirst Policy
It is generally not advisable to surrender a policy. If a policyholder decides to surrender their life insurance policy, the following documents are required:
- Original IndiaFirst Policy documents.
- Cancelled cheque from the policyholder's registered bank.
- Government-issued ID proof such as PAN Card, Driver's License, Aadhaar Card, Voter ID card, or Passport.
- Bank Account Details.
- NRE bank statement showing premiums paid from the NRE account.
Types of Surrender Value in IndiaFirst Policy
There are two types of surrender values in life insurance plans: Guaranteed Surrender Value and Special Surrender Value.
Guaranteed Surrender Value
Policyholders must pay premiums for at least three consecutive years to avail of the Guaranteed Surrender Value. This value typically makes up 30% of the premiums paid for the plan. Additionally, it does not include the first-year premium, any additional fees for riders, or any bonuses received.
For instance, if a policyholder paid ₹60,000 (₹20,000 per year x 3) for the initial three years for a sum assured of ₹6 lakh, the minimum surrender value received would be 30% of ₹40,000 (excluding the first year's premium), which is ₹12,000.
Special Surrender Value
First, to understand this, you need to know what the paid-up value is. If the policyholder stops paying premiums after a specific period, the policy would still be in effect but with a smaller sum assured, known as the paid-up value.
The paid-up value is calculated by multiplying the original sum assured by the ratio of the number of premiums paid to the total number of premiums payable.
When you surrender a policy, you receive a Special Surrender Value, which is determined by adding the paid-up value and any accrued bonuses, then multiplying the result by the surrender value factor.
