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LIC Policy Surrender: Can I Help My Sister-in-Law From Abroad?

Ramalingam Kalirajan |8027 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Feb 20, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Narrindraa on Feb 08, 2025Hindi

My sister in law and her husband have multiple LIC policies .due to financial constraints since past 7 years they have failed to pay the yearly premiums ,currently both have gone abroad and intend to settle there. They both intend to surrender their respective policies which were taken in early 2000's .However ,since both are living abroad ,they have requested me to initiate the process with all the original LIC documents ,which were left with me. My queries are 1.On their behalf how can I submit a surrender form ? 2.What are the documents I need to carry physically at the time of submission? 3.They have around 6 LIC policies( wife and husband ) ,so do I need to have 6 individual forms for every policy ? 4.Do I require an Authorization Letter from them to initiate the process ? 5.If yes, then what is the format /matter to be written ? 6.Can it be typed or it is mandatory to be handwritten letter ? 7.The bank details to be provided to receive the surrender amount has to be of the insurer or can it be of a different person ? 8.Is there a procedure to get the surrender amount online from abroad ? I shall highly obliged if your good self could help and clear my above mentioned queries and if there are a few more which I am not aware please help . Thanks & Regards

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

Asked on - Feb 20, 2025 | Answered on Feb 20, 2025

Sincere thanks Sir for your precise and elucidate answers to all my queries .I am greatly obliged.

Ans: You're most welcome! I'm really glad I could help. If you have any more queries feel free to ask.

Wishing you the best in all your financial decisions! ????

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

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