Guaranteed Surrender Value (GSV) is the minimum cash amount legally guaranteed by the policy contract (a percentage of total base premiums paid excluding taxes, plus surrender value factor on accrued bonuses). Special Surrender Value (SSV) is an actuarially enhanced value based on paid-up sum assured and terminal bonuses. LIC always pays whichever is higher.

Q2: How many years of premiums must be paid before I can surrender an LIC policy? ⌄

Under IRDAI rules, traditional LIC policies acquire a surrender value only after at least 2 full consecutive years of premiums have been paid. If you stop paying before 2 years, the policy lapses with zero surrender value.

Q3: Why is taking an LIC policy loan usually better than surrendering? ⌄

Surrendering completely terminates your life insurance cover, forfeits all future bonuses, and results in substantial financial loss. Taking a policy loan provides immediate liquidity (up to 90% of surrender value) while keeping your life cover and bonus accrual fully active!

Q4: Is the surrender value amount taxable under Income Tax? ⌄

If the policy is surrendered after completing the minimum lock-in period and satisfies Section 10(10D) premium criteria, it is generally exempt. However, if surrendered early or if annual premiums exceeded 10% of the sum assured, TDS and tax may apply.