While purchasing a life insurance policy, many questions hover around the policyholder's mind. One of the most prominent amongst them is calculating the surrender value of their life insurance plan. Postal Life Insurance(PLI) is an insurance plan for government and semi-government employees and professionals in India. There are varied benefits associated with the PLI policy.
However, considering certain personal financial constraints, emergencies or other reasons, a policyholder might decide to surrender their postal life insurance. In such cases, it is important to know the surrender value. Understanding this calculation during policy inception can help make wise decisions later during the policy tenure. So, here is a detail about the PLI surrender calculator.
Before we get started, let us understand what surrender value in postal life insurance means.
What is the Surrender Value of Postal Life Insurance?
When a policyholder surrenders his postal life insurance, he will receive a certain amount based on the extent of premiums paid during the policy term. It is referred to as the surrender value and is returned by the insurance provider. The value is also dependent on other factors such as the type of plan, policy tenure, etc.,
The surrender facility is available to the Endowment Assurance, Whole Life Assurance, Convertible Whole Life Assurance and the Joint Life Assurance plan after 3 years. And it does not apply to Anticipated Endowment Assurance and the Children Policy. Also, the bonus1 based on the reduced sum assured is provided to the policyholder if they surrender it after 5 years.
Policyholders can avail of loans against postal life insurance as the PLI interest rate is extremely less and affordable. However, suppose the policyholder fails to pay the premium thrice. In that case, the insurance provider will process the surrender of the insurance plan and utilise the surrender value to pay off the premium due and the outstanding loan amount.
How to Calculate the Surrender Value?
Policyholders can use the simplest online tool, the postal life insurance surrender value calculator, to determine the surrender value. The calculation of the surrender value involves a few simple steps.
Before understanding the postal life insurance calculator, let us know when the PLI policy will attain a surrender value.
- If the policy tenure is less than 10 years, the PLI will attain a surrender value after the policyholder has paid the premium for at least 2 consecutive years.
- If the policy tenure is 10 years or more, the PLI will attain a surrender value after the policyholder has paid the premium for at least 3 consecutive years.
PLI Surrender Value Calculator
A surrender value calculator is a simple tool available online that is free of cost. It can instantly determine the most approximate surrender value for the PLI policy based on certain basic information provided by the policyholder. Here is a detail about how to use it.
- Visit the Postal Life Insurance official website.
- Browse through the site to find the PLI surrender value calculator.
- The system will prompt for certain basic information such as name, contact details, policy name, policy tenure, number of premiums paid, etc.,
- After providing these basic details and verifying the same, proceed to determine the surrender value.
- The system will instantly compute the value and display it on the webpage.
The policyholder can utilise the PLI calculator to determine the PLI surrender value for the consideration of completion after 3 years, 5 years, 10 years, etc.
How Does the PLI Surrender Calculator Determine the Surrender Value?
The PLI surrender value calculator works based on the following formula.
PLI surrender value = (Paid up value + Bonus1 based on reduced sum assured) x surrender factor
Paid up value = (Sum assured x No. of years or months of premium)/Total policy tenure in months or years
Bonus1 = (Paid up value x Policy Tenure x bonus1 rate)/1000
The surrender factor is predetermined and present in the PLI surrender factor table available online for any references.
The bonus1 is added in April for the policies for which the premiums have been paid regularly till March.
Advantages of Using the Postal Life Insurance Calculator
The policyholders can utilise the PLI calculator to determine the surrender value in simple steps. Here are a few advantages:
- The simple online process to determine the PLI surrender value.
- Compare different PLI policies to determine the most beneficial option based on personal family financial commitments.
- Help manage financial requirements by making well-informed decisions.
Enhancing Life Insurance Coverage
Considering the financial inconsistencies observed in the recent pandemic, every policyholder must determine the necessary life insurance coverage to protect their family's financial future. They can opt for life insurance offered by private insurance providers to enhance their life coverage.
For example, our Tata AIA life insurance plans provide different life insurance plans that provide a huge sum assured at an affordable rate. The policyholders can extend the advantages of life insurance by including savings and investment options to accomplish future financial goals while ascertaining the life cover benefit. We also provide online life insurance policy solutions that help policy seekers view and compare different features to customise them as per their individual financial needs.
Postal life insurance provides life coverage benefits to the government, semi-government employees and other professionals. However, due to a financial emergency, when a policyholder decides to surrender the PLI policy, they will receive a surrender value based on the premiums paid.
Knowing the basis of this surrender value calculation during policy inception is important to make well-informed financial decisions later. The PLI surrender value calculator is an online tool that helps determine this value in a few simple steps. It is easy to use, determines the value instantly and helps compare different PLI policies to make the appropriate choice.