How to buy back a life insurance policy


Sometimes one may find that a life insurance policy that has been purchased for the purpose of saving tax at one point does not really add substantially to its insurance coverage or to the return on investments. In such a scenario, one may wish to terminate the policy before its expiration period instead of keeping it. This is called policy surrender, in which the cash value of the policy is paid to the policy owner.

Surrender value

A policy acquires a cash value when the policy is in force and the mandatory lock-up period has ended. Typically, a policy with three years of successfully paid premiums acquires cash value. The cash surrender value of the contract can be found on the online portal of the insurance company. This is a percentage of the value of the policy fund. A term policy is a pure insurance policy and has no investment element and therefore has no cash value.


Surrender charges are deducted when the policy is surrendered and the remaining amount is paid to the policyholder.

Form and documents

A contract surrender request must be completed and filed with the insurance company. The original police document, a void check and a self-certified copy of the KYC documents must be attached to the application. The reason for the discount may also need to be indicated in the form.

Point to note

  • Once the redemption request is submitted, it will usually be processed within 7-10 business days.
  • When a policy is surrendered, the policyholder loses all of the benefits of the plan, so it is important to weigh the pros and cons of surrendering the policy.

(The content on this page is courtesy of the Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava, and Labdhi Mehta.)


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