Can My Son Surrender His LIC Policies Before Moving Abroad?

Ans: Hello;

You can apply for duplicate policy certificates from LIC by the process laid down for the same.

It is quite cumbersome so better would be if you can search and find policy certificates at your home or agent office.

The agent seems to have provided you with incorrect information.

You are entitled to receive sum assured under the life insurance policies taken for your late father.

Best wishes;

Ans: Your sister-in-law and her husband have made the right decision to surrender their LIC policies. Since they have not paid premiums for seven years, the policies are already in a lapsed state. It is best to recover whatever surrender value is available and reinvest it wisely.

Since they are abroad and have entrusted you with their LIC documents, you will need to follow a structured approach to complete the surrender process.

Below are the answers to your queries in detail.

1. Can You Submit the Surrender Form on Their Behalf?
Yes, you can submit the surrender forms on their behalf. However, LIC requires proper authorization from the policyholders. You will need an authorization letter from them, along with the required documents.

2. Required Documents for Policy Surrender
When visiting the LIC branch, you need to carry the following documents:

Original LIC Policy Bonds for each policy.
Duly filled and signed Surrender Form for each policy.
Authorization Letter from the policyholders allowing you to surrender on their behalf.
Self-attested copies of the policyholders’ passports (as they are abroad, this is essential for identity verification).
Copy of the latest premium receipt (if available).
Bank account details of the policyholders (a cancelled cheque or bank passbook copy).
NEFT Mandate Form duly filled and signed by the policyholders for direct credit of the surrender value.
A self-attested copy of your Aadhaar and PAN card (for branch verification purposes).
3. Is a Separate Surrender Form Required for Each Policy?
Yes. You need to submit a separate surrender form for each LIC policy. Since there are six policies, you must fill six separate forms. LIC processes each policy independently.

4. Is an Authorization Letter Required?
Yes. Since you are handling the surrender process on their behalf, LIC will require a properly signed Authorization Letter from both policyholders. This ensures LIC has legal consent from the policyholders to process the surrender request through you.

5. Format of the Authorization Letter
The letter should be addressed to the specific LIC branch where the policies were issued.

6. Should the Authorization Letter Be Handwritten or Typed?
The letter can be typed and then printed. However, LIC requires the policyholder’s signature to be handwritten. The policyholder must print, sign, and send a scanned copy to you.

For added authenticity, it is advisable for them to sign in blue ink and include a copy of their passport for identity verification.

7. Can the Surrender Amount Be Credited to a Different Person’s Account?
No. LIC strictly credits the surrender amount only to the policyholder’s bank account. The policyholder must provide a cancelled cheque or a bank passbook copy in their name for verification.

If they do not have an Indian bank account, they may have to:

Reopen an Indian account and provide the details to LIC.
Nominate an Indian joint account holder (like a parent) where LIC can transfer the amount.
Check with LIC if direct remittance to an NRO/NRE account is possible.
8. Can the Surrender Amount Be Claimed Online from Abroad?
No, LIC does not have a fully online process for surrendering policies. The policyholder (or an authorized representative) must visit the branch in person to submit the documents.

However, LIC may allow online submission of NEFT details and certain forms through email in some cases. Your sister-in-law and her husband should check with the LIC branch for any specific exemptions.

Additional Considerations
Apart from the above queries, here are a few additional insights:

Tax Implications: If the LIC policies were held for less than five years before lapsing, the surrender value may be taxable. If they were held beyond five years, tax implications will depend on policy type.

Processing Time: LIC usually takes 7-15 working days to process surrender requests. The amount will be credited directly to the provided bank account.

Policy Status: Since premiums have not been paid for seven years, some policies might have acquired a paid-up status rather than surrender value. You can confirm the exact surrender value from the LIC branch.

Final Insights
Your sister-in-law and her husband are making the right decision to surrender these LIC policies. Traditional LIC plans usually provide low returns (4-5%), which do not even beat inflation. Since they have already lapsed, it is better to reclaim whatever surrender value is available.

Instead of keeping the surrender amount idle, they should invest in high-return options like mutual funds for wealth growth. Since they are abroad, they should consider a mix of international and Indian investments to maximize returns.

If they want a structured investment plan, they can consult a Certified Financial Planner (CFP) to reinvest the proceeds efficiently.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You are thinking in the right direction.

It is good that you are evaluating long-term LIC policies seriously. Most people delay it.

Let us now assess your situation in a structured and complete manner.

Your Current Situation
Age: 34 years

Family: Wife and one child (4 years)

Income: Rs 85,000 per month

Home Loan: Rs 7.2 lakh with Rs 31,000 EMI at 9.15% interest

Provident Fund: Rs 3.7 lakh

LIC Policies:

Two traditional endowment plans from 2013 (35-year term)

One traditional money-back plan from 2009

Jeevan Saral gives Rs 7 lakh surrender value (profit)

Jeevan Anand gives Rs 1 lakh surrender value (loss of Rs 50,000)

Let Us Look At Your LIC Policies First
Why LIC Policies Are Not Wealth Creators
These are low-yield, long-term insurance plans.

They give average returns of 4% to 5% annually.

This return is lower than inflation over 20 to 30 years.

Your premium paying term is 35 years — very long duration.

You get maturity at 60 to 70 years — very late for life planning.

These plans offer poor wealth accumulation and flexibility.

The surrender charges in early years are high.

They lock your money without decent compounding.

Even the loyalty additions at maturity are not attractive.

Should You Continue or Surrender?
Let us look at each policy carefully.

Policy 1: Jeevan Saral 165 (Started in 2009)
Surrender value is Rs 7 lakh

You have already earned more than what you paid

You are exiting with profit

There is no reason to keep this low-return policy

You have held it for 15+ years — enough duration already

No future compounding benefit is expected

Take the Rs 7 lakh and use it productively

Policy 2 and 3: Jeevan Anand 149 (Started in 2013)
Only Rs 1 lakh surrender value

Rs 50,000 loss on premium paid

You have held it for 11+ years already

Still 24 years of premium left

Future surrender value may still not justify returns

Loss of Rs 50,000 is painful, but continuing is worse

The value erosion will be higher over time

You are tying your money for 35 years for poor returns

Take the small loss now and invest better

What Should You Do With the Surrender Amount?
Now let us create a 360-degree plan for the Rs 7 lakh and Rs 1 lakh.

1. First, Close the Home Loan
Outstanding principal is Rs 7.2 lakh

Home loan EMI is Rs 31,000

Interest rate is high — 9.15%

Clearing this loan will give instant mental relief

It improves monthly cash flow by Rs 31,000

Use the Rs 7 lakh from Jeevan Saral to close most of the loan

You can arrange the balance Rs 20,000 from savings or PF

This clears your loan fully and frees up EMI burden

2. Stop Paying Premiums on LIC Policies
Surrender the two Jeevan Anand policies now

You get Rs 1 lakh total

Use this amount to build emergency corpus

This gives you financial cushion for 6 months expenses

You avoid any more losses in the future

What Happens When You Free Up Rs 31,000 EMI?
Your monthly savings increase by Rs 31,000

This is a huge jump in cash surplus

You can create a strong wealth building system now

Smart Allocation Of The Surplus
Let us divide this Rs 31,000 wisely:

1. Rs 10,000 — Invest in Child Future
Create a mutual fund SIP in your child’s name

Choose child-focused equity mutual fund via regular plan

Invest through a Mutual Fund Distributor who is also a Certified Financial Planner

Regular plan has guidance, monitoring, and discipline support

Avoid direct plan — it lacks personalisation and emotional anchoring

Avoid index funds — they lack flexibility, give average returns, and don't beat market

This Rs 10,000 monthly will build a good education corpus in 15 years

2. Rs 10,000 — Retirement SIP For You and Wife
Start a diversified equity SIP in your name

Also start Rs 5,000 SIP in wife’s name if she is not earning

Keep this SIP for at least 20 years

This will give you good retirement support

Retirement is your biggest financial goal

3. Rs 5,000 — Emergency Fund & Insurance
Add Rs 1 lakh from surrender value to savings

Add Rs 5,000 every month till you reach 6 months’ expenses

This is your family’s safety net

Also review your health insurance

Ensure you have minimum Rs 5 lakh family floater cover

Buy term life insurance of Rs 50 lakh to Rs 1 crore

This gives full protection to your family

4. Rs 6,000 — Home Planning Fund
You mentioned buying another house in future

Start a SIP in a balanced hybrid mutual fund for this

Invest Rs 6,000 per month in this fund

Use this for down payment after 5 to 7 years

What About Your Provident Fund?
You already have Rs 3.7 lakh in PF

Let it continue for retirement

Don’t withdraw unless it is urgent

PF is good for long-term safety

Should You Still Consider Buying Another House?
Do not rush to buy second home

First focus on becoming debt free and financially secure

Buying another house creates EMI pressure again

Rental yield is very low in India

Property value grows slowly in most locations

Instead, build a strong mutual fund portfolio

It is liquid, transparent, and better compounding

Final Insights
Surrender LIC policies and close your home loan

Free up EMI and use it for smart investment

Protect your family with insurance

Build education, retirement and home funds step-by-step

Mutual funds give better long-term growth than LIC or real estate

Use regular plans with CFP-led guidance

Track and review yearly with your MFD-turned-CFP

Keep focus on long-term goals — child, retirement, wealth

Make money work for you, not sit idle in poor plans

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment