Got insurance policy? Know the cost of surrendering it

The process involves multiple visits to the branch office, affects surrender value of policy

- Anil Poste

Financial security and tax relief are two critical reasons why most people buy life insurance policies. Yet, while it is very easy to buy insurance—it can even be purchased online these days and the premium payments are fairly simple—surrendering your policy is no easy task. The process is lengthy, time-consuming and even involves multiple visits to the insurance branch office.

Take the case of Sandeep Jagtap, a 38-year-old former banker and a businessman in Mumbai. When Jagtap tried to surrender his insurance policy, which had a term of 15 years, last year—five years after purchasing the policy— he found himself confronting several obstacles. For one, the insurer did not clearly communicate the surrender value of the policy. Jagtap was also required to visit the insurance office several times. It was frustrating, says Jagtap.

During Jagtap's visits to the insurance office, an employee there tried to divert his attention towards different insurance products instead of assisting him. It took Jagtap 20 days to finally surrender the policy.

Financial experts say that insurance companies make it extremely difficult for customers to surrender their policies, and thus, every year, a large number of Indians get saddled with life insurance policies that they do not want. People want to surrender policies for various reasons, including a change in their financial goals or because they were mis-sold the policy in the first place. For instance, Mohit Rohan Shrivastava (36), an employee at JLL Business Services at Gurugram, decided to surrender his policy because he had come across better investment options. Jagtap did it because he needed funds to buy a house.