Hi Manish,

I started reading Jagoinvestor articles recently and they are very informative. I made the mistake of mixing insurance with investment and got convinced that I had paid for wrong life insurance products so far. Now I have made most of them as reduced paid-up, except one (I surrendered the policy and need information on this).

Somewhere I read that the guaranteed surrender value will be 30% of total premiums paid (for traditional plans) and according to the new IRDA guidelines, the surrender value becomes 50% between the fourth and the seventh years (not sure if this rule came into effect and is applicable for policies purchased earlier). 

I held a Tata AIA Life Nirvana Plus policy for 7 years and last week, I surrendered it. The annual premium was Rs.9500 approximately and hence total premium amount comes around Rs.66500 for 7 years. When the policy was in force, they declared Reversionary Bonuses of around Rs.30000 (it was not credited to my account. In the Policy Anniversary letter, it is said that the bonus will be paid on maturity of the policy or earlier death). The surrender value they provided was around Rs.33000.

If they paid me 30% of premiums, I would be getting around Rs.20000 + Rs.30000 (bonus). I do not understand how they calculate the surrender value. It would be useful if you can shed some light on this. If you think I have some reason to complain about this, please let me know the procedure also. Thanks a lot.