Understanding surrender value and its implications on life insurance policies

Policyholders of life insurance policies can opt for surrendering their policy before maturity, which will pay them a surrender value, constituting a part of the sum assured. The guaranteed and special surrender values apply only if all premiums are paid for at least two years. Single premium policies acquire the surrender value immediately, but ULIP plans require five years of lock-in period for payout. Upon surrendering the policy, all associated rights, interests, and benefits, including protection cover, cease to exist. Policyholders should weigh the pros and cons and consider alternative options, such as taking a policy loan before making decisions.