How to Cancel SBI Life Insurance Policy in 2025: Complete Guide
How to Cancel SBI life Insurance policy in 2025 Life insurance is often purchased with the intention of securing a family’s financial future. However, many policyholders later realize that their policy may not suit their needs or is not delivering value. Among India’s largest insurers, SBI Life Insurance is often seen as trustworthy due to the SBI brand. Yet, many customers face challenges when they decide to cancel or surrender their policy.
This guide explains in detail how to cancel SBI Life Insurance in 2025, what to expect in terms of refunds or surrender value, what real customers have experienced, how it compares with other insurers, and whether it’s worth keeping or surrendering your policy.
1. Understanding SBI Life Policy Cancellation
- Free Look Period (First 15 Days)
- If you just bought the policy and received the bond, you can cancel it within 15 days (30 days if purchased online).
- You will get most of your premium back, minus stamp duty charges and medical test costs.
- Surrendering the Policy (After Lock-in)
- Traditional policies: You must pay premiums for at least 3 years before you can surrender.
- ULIPs (Unit Linked Insurance Plans): You can stop after 2–3 years, but your money gets locked into a discontinued fund until 5 years are over.
- Paid-Up Option
- Instead of fully surrendering, you can stop paying premiums after 3 years.
- Your policy becomes “paid-up” and you receive a reduced sum assured or maturity benefit.
2. Real Customer Experiences with SBI Life Cancellation
Positive Experience – (Rahul, Pune, 2023)
“I bought SBI Life Smart Shield, but later realized I needed only a pure term plan. I cancelled it during the free-look period and got back 95% of my premium. The process was smooth at my local SBI branch.”
Negative Experience – (Aparna, Bangalore, 2024)
“I had an SBI Life Smart Wealth Builder policy. After paying premiums for 3 years, I tried surrendering. They gave me back only 30% of what I paid. The agent had promised high returns, but it was peanuts compared to the investment. I regret buying it.”
Frustrating Experience – (Suresh, Chennai, 2022)
“SBI Home Loan department forced me into a life insurance policy without my consent. They even created a personal loan to pay the premium. Years later, I came to know about it and was shocked. They also ruined my credit score by reporting me as a defaulter. Be very cautious!”
Mixed Experience – (Meena, Delhi, 2023)
“My ULIP policy was discontinued after I missed my second premium. The fund was shifted into a discontinued policy fund earning 3.5% per year. I finally got my money after 5 years, but with very little growth. At least I didn’t lose everything.”
3. Key Rules for Cancelling SBI Life Insurance
- Lock-in Period: Most traditional plans require 3 years of premium payment.
- Surrender Value: Usually 30% of premiums paid (excluding the first year and extra premiums).
- ULIPs: If discontinued early, funds shift to “Discontinued Fund” and remain locked for 5 years.
- Annuity Plans: Once purchased, cannot be cancelled for a lump sum refund.
- Health Riders: No refunds if cancelled outside free-look period.
4. Why Do People Cancel SBI Life Policies?
- Low Returns – Policies often yield 4–6% returns, less than fixed deposits.
- High Charges – Policy management fees, investment charges, surrender charges reduce value.
- Forced Selling by Bank Branches – Many customers allege they were tricked into buying policies.
- Complicated Claim Settlement – Fear that claims may get delayed or rejected.
- Better Alternatives – Term insurance + mutual funds or FDs give more flexibility and returns.
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5. Step-by-Step Guide: How to Cancel SBI Life Insurance in 2025
- Review Your Policy Document – Check surrender clauses, lock-in period, and charges.
- Contact SBI Life – Call customer care (1800 267 9090) or visit the nearest SBI Life branch.
- Obtain Surrender/Cancellation Form – Fill in policy details and reason for cancellation.
- Submit Documents –
- Policy bond
- ID proof (Aadhaar, PAN)
- Bank account details (for refund)
- Verification – Insurer may call to confirm your request.
- Refund Process –
- Within free-look period: Refund in 7–10 working days.
- After 3 years: Refund of surrender value (30–35% approx).
- ULIPs: Fund value credited after lock-in completion.
6. SBI Life vs Other Insurers – Surrender Comparison
| Feature / Company | SBI Life Insurance | LIC of India | HDFC Life | ICICI Prudential Life |
|---|---|---|---|---|
| Free Look Period | 15–30 days | 15–30 days | 15–30 days | 15–30 days |
| Min. Years to Surrender | 3 years (traditional) / 2 yrs (ULIP) | 3 years | 3 years | 2–3 years |
| Surrender Value | 30% of paid premiums (excl. 1st year) | 30% of paid premiums | 35%–40% | 30%–35% |
| ULIP Returns on Discontinued Policy Fund | 3–4% | 3–4% | 4% | 4% |
| Customer Feedback | Mixed to Negative | Average but trusted | Faster settlement | Transparent process |
7. Alternatives Instead of Cancelling
- Convert to Paid-Up Policy – Stop paying premiums but keep coverage in reduced form.
- Take a Loan Against Policy – Useful for short-term needs.
- Reduce Sum Assured – To lower premiums.
- Switch Future Investments – Redirect money into mutual funds, FDs, or PPF.
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8. Buying Guide – How to Avoid Mistakes in Future
- Separate Insurance and Investment
- Buy pure term insurance for life cover.
- Invest in mutual funds, stocks, or FDs separately.
- Always Read Policy Documents
- Don’t rely only on agents.
- Check Surrender Rules
- Some policies look attractive but lock your money for years.
- Don’t Buy Insurance for Tax Savings Alone
- Tax-saving should be secondary; focus on protection first.
- Prefer Simplicity
- Term insurance is transparent: pay premium → get coverage.
9. FAQs – Cancelling SBI Life Insurance
Q1. Can I cancel SBI Life insurance after 2 years?
Only ULIPs can be discontinued after 2 years. Traditional plans require 3 years.
Q2. How much money will I get back if I surrender?
Generally, 25–35% of premiums paid, excluding the first year.
Q3. What happens if I stop paying premiums?
Policy lapses after grace period. If you’ve paid at least 3 years, it acquires “paid-up” value.
Q4. Is annuity policy cancellable?
No, annuity policies cannot be surrendered for a lump sum refund once purchased.
Q5. Will cancelling affect my CIBIL score?
Cancellation does not affect your credit score. But if a linked loan is involved, unpaid dues can harm your CIBIL rating.
Q6. How long does refund take?
Within 10 working days in free-look; otherwise, 30–60 days.
10. Expert Verdict – Should You Cancel SBI Life Policy?
Based on customer experiences, cancelling SBI Life Insurance is often a loss-making decision because surrender values are very low. But if you feel the policy is unsuitable and you are losing more money by continuing, it may be wiser to exit and invest elsewhere.
- If you are still within the free-look period, cancel immediately.
- If you are past 3 years and returns are poor, compare paid-up vs surrender.
- If you are in a ULIP, consider whether to stay invested for 5+ years for better fund growth.
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Final Thoughts
SBI Life Insurance carries the SBI brand name, which attracts many customers. However, real customer stories reveal issues with forced selling, poor returns, and complicated surrender processes. Cancelling your SBI Life policy in 2025 is possible, but you must be prepared for low refunds and surrender charges.
The lesson from thousands of policyholders is clear: keep insurance and investment separate. Buy a pure term plan for protection and use other avenues for wealth creation.
By making informed decisions, you can avoid the pitfalls of expensive policies and safeguard your hard-earned money.
