I want to close my LIC policy. My policy is for 12 years. i have completed 4year?

Congratulations! For making a tough but right long-term decision. It is evident that surrendering a LIC Policy after having paid the premiums for the first 4 years may be considered by many an unwise option, as you stand to lose some money. But then, continuing with high premiums only at the behest of your agent is even more unwise and over the long-term this could hurt your finances a lot more.

There is a surrender value applicable, if you have paid premiums regularly for atleast 3 years. So you will not lose all your money or premiums paid. There are interesting options offered by LIC too. Read on more...the following excerpt from an article at personalfn.com

The trouble begins when you decide to discontinue the policy like many ULIP & Insurance investors have done in the recent past, after realising that the policy doesnâ€™t quite fit into their scheme of things.

In such a scenario, the policy is considered to have lapsed and all the premiums paid are forfeited. More importantly, the insurer doesnâ€™t entertain any claims once the policy lapses. However, it should be understood that the policy is not necessarily forfeited i.e. the policyâ€™s value doesnâ€™t become nil. The Insurance Act does not allow for forfeiture as every policy acquires a reserve based on the premiums already paid.

The Insurance Act provides for a return to the policy holder of an amount that is representative of the reserve and this is referred to as the â€˜Surrender Valueâ€™ or the â€˜Cash Valueâ€™. The Insurance Act stipulates that every insurance policy shall have a guaranteed Surrender Value, if at least 3 yearsâ€™ premiums have been paid. This reserve arises due to the following:

1. Premiums in the early years of the policy being more than what is justified.

2. Savings element in the premium.

Apart from the option of surrendering your policy, insurers like LIC also provide other options like making a policy â€˜paid-upâ€™, whereby the policy remains in force with a reduced sum assured, depending upon the number of premiums paid. Another option is to keep the policy in force by deducting future premiums, from the Surrender Value. A third option is to provide term insurance subject to the condition that the Surrender Value is more than the sum assured.

Read the complete article at
http://www.personalfn.com/detail.asp?date=3/14/2007&story=5