Section 20 in Insurance Regulatory and Development Authority of India (Non-Linked Insurance Products) Regulations, 2019
20. Acquisition of Surrender Value.
(a)All individual savings and protection oriented products such as non-linked life insurance products, and non-linked pension products including deferred annuity products, other than pure risk premium products such as term insurance, health insurance and immediate annuity products, shall acquire, both, a guaranteed surrender value and special surrender value, if higher. The guaranteed surrender value shall acquire in the following manner:If all premiums have been paid for at least two consecutive years, the policy shall acquire a guaranteed surrender value, to which shall be added the surrender value of any subsisting bonus and any guaranteed additions already accrued to the policy.(b)Other than single premium products: The minimum guaranteed surrender value shall be the sum of guaranteed surrender value and the surrender value of the any subsisting bonus and any guaranteed additions already attached to the policy.The guaranteed surrender value shall be at least:i. 30% of the total premiums paid less any survival benefits already paid, if surrendered during the second year of the policy, andii. 35% of the total premiums paid less any survival benefits already paid, if surrendered during third year of the policy.iii. 50% of the total premiums paid less any survival benefits already paid, if surrendered between the fourth year and seventh year of the policy, both inclusive.iv. 90% of the total premiums paid less any survival benefits already paid, if surrendered during the last two years of the policy.v. The surrender value beyond the seventh year shall be filed by the insurer under the product filing procedure. Such surrender value shall follow a smooth progression and converge to at least 90% of the total premiums paid less any survival benefits already paid, as the policy approaches maturity.vi. Surrender value of any subsisting bonus and any guaranteed additions already attached to the policy shall be stated under the product filing procedure.(c)Single premium products: The guaranteed surrender value shall be the sum of guaranteed surrender value and the surrender value of the any subsisting bonus and any guaranteed additions already attached to the policy. The guaranteed surrender value shall be at least:i. 75% of the total premiums paid less any survival benefits already paid, if surrendered any time within third policy year.ii. Subject to (iii), 90% of the total premiums paid less any survival benefits already paid, if surrendered in the fourth policy year.iii. 90% of the total premiums paid less any survival benefits already paid, if surrendered during the last two years of the policy.iv. The surrender value beyond the fourth year shall be filed by the insurer. Such surrender value shall follow a smooth progression, and converge to at least 90% of the total premium paid less any survival benefits already paid as the policy approaches maturity.v. Surrender value of any subsisting bonus already attached to the policy shall be approved under the product filing procedure.(d)Every such policy shall show the guaranteed surrender value of the policy at the close of each year after the second year of its currency or at the close of each period of three years throughout the currency of the policy in the policy document.(e)A policy which has acquired a surrender value shall not lapse by reason of the non-payment of further premiums but shall be kept in-force to the extent of the paid-up sum assured and the subsisting reversionary bonuses including guaranteed addition, if any. This provision is in accordance with the provisions of Regulation 3(b)(iii) of IRDAI (Acquisition of Surrender and Paid Up Values) Regulations, 2015 as amended from time to time.(f)The surrender value shall be the higher of the guaranteed surrender value and the special surrender value.
