Surrendering a life insurance policy means you are terminating it before maturity in exchange for the surrender value offered by the insurance company. Whether you are opting for a full surrender (completely ending the policy) or a partial withdrawal (taking out some funds from a ULIP), you need to submit certain documents to your insurer to process the request smoothly.
Below is a comprehensive list of documents generally required by most insurance companies in India.
1. Original Policy Document
The first and most important requirement is the original life insurance policy bond.
- It serves as proof that you are the rightful policyholder.
- If the original document is lost, you may be required to submit an Indemnity Bond or an Affidavit on stamp paper declaring the loss.
2. Duly Filled Surrender Request Form
Insurance companies provide a policy surrender form or discharge form, which must be filled out and signed by the policyholder.
This form generally includes:
- Policy number
- Policyholder’s name
- Reason for surrender
- Bank details for receiving surrender proceeds
- Signature of the policyholder (must match the records with the insurer)
3. Identity Proof
A valid KYC document is mandatory to confirm the policyholder’s identity.
Accepted identity proofs include:
- Aadhaar Card
- PAN Card
- Passport
- Voter ID
- Driving License
4. Address Proof
Some insurers ask for address proof along with identity proof, especially if there is a change in address from the time of policy issuance.
Accepted documents include:
- Aadhaar Card
- Utility bills (electricity/water/telephone – not older than 3 months)
- Rental agreement
- Bank passbook with current address
5. Bank Account Details
To ensure the surrender value is credited to the correct account, you must provide:
- A cancelled cheque with your name pre-printed
- Or a copy of the first page of your bank passbook
- Some insurers also request bank account verification forms
6. PAN Card Copy
For tax reporting purposes, many insurers ask for a PAN card copy, especially if the surrender value is taxable under Section 10(10D) of the Income Tax Act.
7. Policyholder’s Photograph
A recent passport-size photograph may be required in some cases, particularly for ULIP surrenders or for verification purposes.
8. NEFT/Direct Credit Mandate Form
Most insurers use NEFT/Direct Credit to transfer the surrender value. You may be asked to submit:
- NEFT mandate form (available from insurer)
- Cancelled cheque
- Signature verification from the bank (if needed)
9. Additional Requirements for ULIP Plans
If you are surrendering a Unit Linked Insurance Plan (ULIP):
- NAV (Net Asset Value) will be calculated as per the date of receipt of request.
- You may have to submit additional documents confirming your consent to redeem units.
Things to Remember Before Surrendering
- Check Surrender Value: Request a surrender value quote before applying, as surrendering early may result in heavy deductions or penalties.
- Tax Implications: The payout may be taxable if the policy does not qualify for exemption under Section 10(10D).
- Alternative Options: Consider converting the policy to a paid-up policy instead of surrendering if you want to maintain life cover.
Conclusion
Giving up a life insurance coverage is a big financial choice. By preparing all the required documents in advance—original policy bond, surrender request form, identity and address proofs, bank details, PAN card copy, and NEFT mandate form—you can ensure a smooth and quick process. Always consult your insurance advisor before surrendering to understand the financial impact and explore better alternatives.
