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    Is it Wise to Surrender your Life Insurance Plan?

    Last Updated On 18-09-2015

    There are times when you are faced with a situation where liquidating your assets seems like the best option available. This might be due to a financial emergency, while in other cases you may receive a more lucrative investment offer which makes you relook at your existing portfolio of investments. However, when exiting a life insurance policy, one must consider certain critical factors before making any hasty decisions.

    It is important to understand that life insurance is primarily a protection tool to financially secure your family’s future in case something was to happen to you. 

    To put it simply, when you surrender a life insurance policy you lose out on all benefits associated with it; i.e. death benefits and maturity benefits. Also, since insurance policies are typically issued for long-term, the fund managers invest with a long-term objective hence these products usually deliver results over a period of time. Since the basic premise for buying insurance is long term protection, surrender charges come into play if you decide to prematurely exit the policy. 

    Therefore, liquidating a life insurance policy should be the last step that you should take incase you need emergency funds. Also, while deliberating on whether or not to exit an insurance policy in lieu of a more lucrative option offered by your agent, you need to consider the fact that there would be surrender charges on the existing policy. And the new policy that you invest in will come with entry charges, hence neutralizing any benefit that you can hope to gain. A surrender charge is levied on policy holders upon cancellation of their policy before maturity; i.e. the pre-defined length of the policy term, and is designed to cover the cost of keeping the policy on an insurer’s books. It also helps the insurer offset additional costs incurred due to early termination of your policy. It is calculated as a percentage of the premiums paid by you till the date of surrender. 

    Starting effective January 1st, 2014, the insurance regulator (IRDA) has revised the surrender charges, rewarding those customers who stay invested for long-term, while ensuring that those who exit prematurely don’t get a raw deal and lose the majority of their investment. As per the new guidelines, those who exit within two to three years get minimum of 30% of premiums paid as surrender value. On the other hand they get 50% if they exit between four to seven years and 90% if they stay invested up to two years prior to maturity. So it is evident that staying invested for the entire length of the policy term is the most profitable scenario, while ensuring you and your family are adequately protected financially. 

    I would end by re-iterating that insurance is typically bought to protect your family’s future income or as an investment for your child’s education or retirement. Insurance is a long-term asset class; hence, surrendering an insurance policy should be the last option when liquidating your portfolio

    Find out more about surrender value in insurance, and explore PNB MetLife income protection and other family protection plans at PNB MetLife.

    • *Tax benefits are subject to conditions and other provisions of the Indian tax laws and are subject to amendments made thereto from time to time.


    The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

    PNB MetLife India Insurance Company Limited, Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka.
    IRDAI Registration Number 117. CI No: U66010KA2001PLC028883.
    Please read this Sales brochure carefully before concluding any sale. This product brochure is only indicative of terms, conditions, warranties and exceptions contained in the insurance policy. Detailed terms and conditions are contained in the policy document
    For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding any sale. Terms and Conditions Apply. "Goods and service Tax (GST) shall be levied as per the prevailing tax laws which are subject to change from time.
    The marks “PNB” and “MetLife” are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
    Call us Toll-free at 1-800-425-6969.. Phone: 080-66006969, Website:, Email: or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203

    EC140 LD/2019-20/144

    • IRDAI is not involved in activities like selling policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.


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    As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at or You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.

    PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance PlansTerm PlanProtection PlansLong Term Savings Plans , Retirement Plans & Child Education Plan.

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