Surrender Transaction Process

Fee Transaction Generated Prior to Surrender Transaction

During the 100% surrender transaction process, the system will check for any fee transaction that is Un-Allotted. If there is an Un-allotted fee transaction, then the transaction will be reversed. The fee must be taken through fee override and the fee transaction will not get generated.

Note:

For 100% Unit Transfer Surrender Transaction with transaction type as BALANCE TRANSFER OUT, fee transaction generated for the policy will get reversed and will not be overridden.

Surrender Transaction Generated Prior to Fee Transaction

During the fee redemption transaction generation process, the system will check for any 100% surrender transaction that is Un-Allotted. If there is an Un-allotted transaction, then the Fee would be taken through fee override and the fee transaction will not get generated.

Note:

For 100% Unit Transfer Surrender Transaction with transaction type as BALANCE TRANSFER OUT, fee transaction will not be generated and will not be overridden.

Surrender Transaction before Annuity Generation

When you have entered all the mandatory information for a 100% surrender transaction, system will if the annuity is applicable for the policy and for the month.

If annuity is applicable for the policy, then the system will calculate the next annuity generation date using annuity frequency and annuity payment lag. If difference between annuity generation date and 100% surrender transaction date is greater than or equal to 4 days, then system will check for the funds for which 100% surrender is being processed are also part of the annuity asset allocation. If funds are common between 100% surrender transaction and annuity asset allocation then, following warning message will be displayed as Annuity transaction is applicable for this policy, are you sure you wish to proceed with this transaction?. You can select override the message and proceed the transaction.
If difference between annuity generation date and 100% surrender transaction date is less than 4 days, then system will check for the funds for which 100% surrender is being processed are also part of the annuity asset allocation. If funds are common between 100% surrender transaction & annuity asset allocation then error message will be displayed as Annuity is in progress, this transaction can not be processed. You will not be allowed to proceed with this transaction.

Automatic Surrender of Policy

The system facilitates automatic surrender of policy when the policy’s market value goes below certain threshold amount. This amount parameterizes at the system level. This surrender is paid to the product account and not to the policy holder.

Process Automatic Surrender and Threshold Policy Market Value defined in the Product Maintenance Detail screen accounts for the automatic surrender of policy. This can be explained as follows:

The user is able to input the threshold value, if Process Automatic Surrender is checked.
The system automatically triggers 100% policy withdrawal transaction, if Threshold Policy Market Value is less than this threshold amount.

The System then triggers an automatic surrender transaction with the following parameters:

Portfolio Surrender flag as True
Payment Mode as Transfer
Payment Type as Product
Asset allocation with all funds having balances and percentage applied as 100%

Refer to the topic Product and Batch Activities for further information on Automatic Surrender.

5.1.9 Surrender Transaction Process