What is the difference between Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV) in LIC?

Guaranteed Surrender Value (GSV) is the statutory minimum payout guaranteed by LIC contractually: a percentage (30% to 90%) of total premiums paid excluding first-year premium plus surrender value of vested bonuses. Special Surrender Value (SSV) is calculated using LIC's actuarial discounting factor applied to the Paid-Up Sum Assured plus accrued bonuses. LIC contractually pays whichever amount is higher between GSV and SSV.

Is it better to surrender an LIC policy or make it Paid-Up?

If you are early in the policy (e.g., Year 3 to 7) and have more than 10-15 years remaining to maturity, surrendering and reinvesting the cash into diversified equity index funds or PPF mathematically recovers the loss. However, if your policy is close to maturity (under 5 years remaining), making it Paid-Up is generally superior because you avoid the severe early surrender discount and collect proportionate maturity proceeds at term end.

What documents are required to surrender an LIC policy?

To surrender an LIC policy, you must visit your home servicing branch with: (1) Original Policy Bond, (2) Duly filled LIC Surrender Form No. 5074, (3) NEFT Mandate Form with a cancelled cheque or bank passbook copy, (4) Self-attested PAN card and Aadhaar card copy.

LIC GSV vs SSV Valuation Engine Form 5074 Compliance Surrender vs Paid-Up vs BTID

LIC Policy Surrender Value & Paid-Up Calculator

Compute your exact Guaranteed Surrender Value (GSV) vs Special Surrender Value (SSV), quantify your capital loss haircut, and evaluate the Paid-Up Policy Alternative and 90% Loan Against Policy before making an exit decision.

Common Policy Surrender Scenarios:

Policy Particulars

Select LIC Policy Plan

Basic Sum Assured ₹5,00,000

₹

Annual Premium (excl. GST/Riders) ₹30,000 / yr

₹

Total Policy Term

Years

Premiums Paid

Years

Alternative Reinvestment Return (% p.a.)

Benchmark: Nifty 50 Index Fund ~12%, PPF ~7.1%, Post Office TD ~7.5%

Payable Surrender Cash Value (Higher of GSV vs SSV) Special Surrender Value (SSV) Applied

₹65,000

Total Paid in Premiums

₹1,50,000

Surrender Haircut (Loss)

-₹85,000

56.7% Capital Loss

Guaranteed Value (GSV)

₹62,700

Statutory Floor

Special Value (SSV)

₹65,000

Actuarial Value

Exit Alternatives

Should You Surrender, Convert to Paid-Up, or Borrow?

Zero Penalty Option

Option A: Surrender

₹65,000

Instant cash in your bank account today. Life cover terminates immediately.

Option B: Make Paid-Up

₹2,37,500

Pay ₹0 more premiums. Collect reduced Sum Assured + accrued bonus at maturity.

Option C: Policy Loan

₹58,500

Borrow up to 90% of surrender value @ 9.5% interest without losing policy cover.

Evaluating surrender haircut vs terminal reinvestment wealth...

Projected BTID Wealth Surplus: +₹1,82,500

Capital Breakdown & Wealth Recovery Trajectory

Visual Model

LIC Exit Options Master Comparison Table

IRDAI Guidelines

Exit Strategy	Immediate Cash	Life Cover	Future Premiums	Terminal Payout	Actionable Verdict
Option A: Surrender (Cash Out)	₹65,000	Terminated (₹0)	₹0 (Stopped)	₹0 (Zero)	Immediate liquidity, high capital loss
Option B: Paid-Up Policy	₹0 Today	₹1,25,000	₹0 (Stopped)	₹2,37,500	Zero loss, collect reduced cover + bonus at maturity
Option C: Policy Loan (90%)	₹58,500	100% Intact (₹5,00,000)	Continues as scheduled	Full maturity less outstanding loan	Emergency cash without forfeiting policy or cover. Calculate Loan →
Option D: BTID Reinvestment	Reinvested	Replace with Term Cover	Redirected to Equity SIP	₹4,20,000+	Outperforms paid-up by ₹1.8 Lakh

How to Surrender an LIC Policy: Rules, Form 5074 & Procedure (2026)

Surrendering a life insurance policy before maturity is a significant financial event that almost always results in a substantial capital deduction. Understanding the difference between Guaranteed Surrender Value (GSV), Special Surrender Value (SSV), and the Paid-Up Policy Alternative empowers you to preserve hard-earned wealth rather than handing unnecessary profits to the insurer.

Form 5074 & Discharge Voucher

To initiate surrender, you must submit LIC Form No. 5074 along with the Original Policy Bond to your home branch. LIC issues a Discharge Voucher (Form No. 3805) specifying the payable amount for your signed endorsement.

Mandatory 2-Year Lock-In

Under IRDAI regulations, traditional non-linked policies acquire surrender value only after payment of at least two full consecutive years of premiums. Surrendering in Year 1 results in 100% loss of paid premiums.

Section 194DA TDS Rules

Under Section 194DA of the Income Tax Act, if the surrender proceeds are not exempt under Section 10(10D) and the net taxable profit exceeds ₹1,00,000, LIC deducts 5% TDS on the net gain (proceeds minus premiums paid).

LIC Policy Surrender Value & Paid-Up Calculator

Policy Particulars

Should You Surrender, Convert to Paid-Up, or Borrow?

Capital Breakdown & Wealth Recovery Trajectory

LIC Exit Options Master Comparison Table

How to Surrender an LIC Policy: Rules, Form 5074 & Procedure (2026)

Form 5074 & Discharge Voucher

Mandatory 2-Year Lock-In

Section 194DA TDS Rules

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