Surrender value is the amount you get if you decide to stop your insurance policy before it ends. Many people buy long-term plans but sometimes need money urgently or no longer want the policy. In such cases, you can surrender the plan and take back some money.
Not all policies offer surrender value. Usually, you must pay premiums for at least 2–3 years before you can surrender. The amount you get is less than what you’ve paid, because charges are deducted. Over time, the surrender value increases.
Endowment and whole life plans usually have a surrender value. ULIPs also have one, based on the fund value.
Before surrendering a policy, check if you can get a loan against it or make it paid-up (where you stop paying but still get a smaller benefit). Always ask your insurer or agent to explain your options.
