If a policyholder wants to exit his life insurance policy during the initial years, he will get a higher refund from the insurance company now. After several rounds of discussions and proposals, the Insurance Regulatory and Development Authority of India (IRDAI) has ordered a higher special surrender value (SSV) for traditional endowment policies. Now, the policyholder will get a part of his premium back even if he exits after one year. This will indeed offer more liquidity and flexibility to life insurance customers if they want to switch their policies, said many experts. What is the special surrender value rule proposed by the IRDAI? How will it be calculated? How much will the policyholders get back if they prematurely exit their life insurance policies? Will the rule apply for existing endowment policies? ET Wealth Online explains it for you.
New IRDAI rule: How to calculate special surrender value of life insurance policy
In a master circular for life insurance business dated June 12, 2024, the IRDAI has said that the special surrender value should be at least equal to the present value of
(a) paid-up sum assured on all contingencies covered and
(b) paid-up future benefits (such as income benefits), if any, and
(c) accrued/veste benefits, duly allowing for survival benefits already paid (whatsoever name called), if any
