It is the sum the insurer must provide to the policyholder if they choose to completely withdraw or cancel the policy before its maturity date. If there is a mid-tenure surrender, then the sum distributed towards earnings and savings is given to the policyholder.
The introduction of a new surrender value norm that came into effect on 1 October 2024 is one of the most significant changes in the life insurance sector.
Policyholders can now obtain a surrender value after just one year of holding the policy, provided they have paid the premium for the entire year.
As per the new Irdai regulations, the Special Surrender Value must be determined to ensure it is at least equivalent to the current value of the paid-up sum insured along with the accrued benefits of the policyholder.
TDS rates for insurance payouts which exceed Rs 1 lakh have been slashed from 5 per cent to 2 per cent. This means policyholders will retain more in-hand income from their survival and maturity benefits.
Compiled by Syed Muskan
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