Calculate Guaranteed Surrender Value (GSV) and Paid-Up Value before surrendering an endowment LIC policy or switching to a Term Plan + Mutual Fund SIP.
| Policy Years Completed | GSV % of Premiums Paid | Vested Bonus Surrender % | Recommended Action |
|---|---|---|---|
| Year 2 to Year 3 | 30% of Total Premiums | ~15%–18% of Vested Bonus | High hair-cut; redirect future premiums to SIP |
| Year 4 to Year 7 | 50% of Total Premiums | ~18%–22% of Vested Bonus | Compare Special Surrender Value (SSV) vs Paid-Up |
| Year 8+ to Maturity-2 | 55% to 90% of Total Premiums | ~25%–35% of Vested Bonus | Convert to Paid-Up instead of taking cash haircut |
Surrendering closes the policy immediately for a discounted cash value (GSV/SSV), whereas making it Paid-Up stops all future premium obligations and pays out the reduced Paid-Up Sum Assured + accrued bonuses at maturity.