The surrender charge is calculated by multiplying the initial units account value by the surrender charge depending on the policy year at the point of surrender. The surrender charge will be deducted from the policy value prior to your payout.
E.g. Mr. Lim bought a 25-year premium payment term FWD Invest First policy. He decides to surrender his policy in policy year 9, month 10.
- Policy year in which policy was surrendered: Year 9 (rounded down from 9 years and 10 months)
- Applicable surrender charge: 83%
- Initial units account value: $50,000; Accumulation units account value: $220,000
Surrender charge = applicable surrender charge x initial units account value
= 83% x $50,000
Surrender value = (initial units account value – surrender charge) + accumulation units account value
= ($50,000 – $41,500) + $220,000