Understanding LIC Policy Bonuses & Profit-Sharing Mechanics
The LIC Bonus Calculator is an actuarial simulation utility built to help Indian policyholders, financial advisors, and investors accurately track and project the profit-sharing earnings generated across their Life Insurance Corporation of India (LIC) policies.
When you invest in a "With-Profits" (Participating) policy - such as LIC New Endowment (Plan 914), Plan 814, Jeevan Anand (Plan 915), Jeevan Labh (Plan 936), or Jeevan Umang (Plan 945) - you become entitled to participate in LIC's annual valuation surplus. LIC redistributes 95% of its total actuarial surplus back to policyholders in the form of Simple Reversionary Bonuses, Final Additional Bonuses (FAB), and Loyalty Additions (LA).
The Four Categories of Bonuses Declared by LIC
LIC operates four distinct bonus allocation mechanisms depending on the policy structure, duration, and plan type:
| Bonus Type | Declaration Frequency | Applicable Policy Plans | Payout Timing & Guarantees |
|---|---|---|---|
| Simple Reversionary Bonus (SRB) | Annually (Post March 31st Valuation) | Plans 914, 915, 936, 945, 920, 921, 814, 14, 149 | Accrues yearly; paid as guaranteed lump sum on maturity or death. |
| Final Additional Bonus (FAB) | One-time Terminal Addition | Participating plans with terms 15 years and above | Paid on maturity or death if the policy ran for 15+ years. |
| Interim Bonus | Pro-rata during valuation cycle | All active participating policies | Paid on policies exiting between two annual valuation dates. |
| Loyalty Addition (LA) | One-time or Periodic | Plans 165 (Jeevan Saral), 916 (Bima Bachat), 943, 944 | Paid in lieu of annual bonuses upon maturity or qualifying tenure. |
Simple Mathematical Formulas for LIC Bonus Computation
Calculating your accrued and projected bonuses is based on clear, transparent arithmetic:
Annual Bonus = ₹10,00,000 × (₹48 ÷ 1,000) = ₹48,000 per year.
Total Maturity Payout = ₹10,00,000 + (21 × ₹48,000) + ₹1,00,000 = ₹21,08,000 (100% Tax-Free).
Comprehensive LIC Policy Declared Bonus Rate Chart (2014 to 2026)
The table below displays the official declared simple reversionary bonus rates (per ₹1,000 Sum Assured) across LIC's top participating plans across various tenure brackets:
| Plan Name & Table Number | Term: 5 to 10 Yrs | Term: 11 to 15 Yrs | Term: 16 to 20 Yrs | Term: 21+ Yrs |
|---|---|---|---|---|
| New Endowment (Plan 914 / 814 / 14) | ₹34 / ₹1k SA | ₹38 / ₹1k SA | ₹44 / ₹1k SA | ₹48 / ₹1k SA |
| Jeevan Anand (Plan 915 / 815 / 149) | ₹37 / ₹1k SA | ₹41 / ₹1k SA | ₹45 / ₹1k SA | ₹49 / ₹1k SA |
| Jeevan Labh (Plan 936 / 836) | - | ₹40 (16/10 Term) | ₹44 (21/15 Term) | ₹47 (25/16 Term) |
| Jeevan Umang (Plan 945 / 845) | - | ₹46 / ₹1k SA | ₹49 / ₹1k SA | ₹52 / ₹1k SA |
| Single Premium Endowment (917 / 817) | ₹38 / ₹1k SA | ₹42 / ₹1k SA | ₹46 / ₹1k SA | ₹50 / ₹1k SA |
| Money Back 20 Years (Plan 920 / 820) | - | - | ₹39 / ₹1k SA | - |
| Money Back 25 Years (Plan 921 / 821) | - | - | - | ₹44 / ₹1k SA |
| Bima Jyoti (Plan 860) | ₹50 (Guaranteed) | ₹50 (Guaranteed) | ₹50 (Guaranteed) | - |
Official Final Additional Bonus (FAB) Rates Matrix
Final Additional Bonus (FAB) provides a massive return multiplier for long-term disciplined policyholders. The official rate scale per ₹1,000 Sum Assured is outlined below:
| Policy Term (Tenure) | Sum Assured: Up to ₹1,99,999 | Sum Assured: ₹2,00,000 to ₹4,99,999 | Sum Assured: ₹5,00,000 and Above |
|---|---|---|---|
| 15 Years | Nil | ₹20 / ₹1k SA | ₹25 / ₹1k SA |
| 16 Years | Nil | ₹25 / ₹1k SA | ₹30 / ₹1k SA |
| 18 Years | ₹10 / ₹1k SA | ₹35 / ₹1k SA | ₹45 / ₹1k SA |
| 20 Years | ₹20 / ₹1k SA | ₹50 / ₹1k SA | ₹70 / ₹1k SA |
| 21 Years | ₹25 / ₹1k SA | ₹75 / ₹1k SA | ₹100 / ₹1k SA |
| 25 Years | ₹150 / ₹1k SA | ₹350 / ₹1k SA | ₹450 / ₹1k SA |
| 30 Years | ₹300 / ₹1k SA | ₹500 / ₹1k SA | ₹600 / ₹1k SA |
| 35 Years | ₹550 / ₹1k SA | ₹750 / ₹1k SA | ₹900 / ₹1k SA |
Practical Case Studies & Illustrative Scenarios
Case 1: 21-Year Jeevan Anand Policy (₹10 Lakhs Sum Assured)
Ramesh purchased an LIC Jeevan Anand (Plan 915) policy in 2005 for a 21-year term with a ₹10,00,000 Basic Sum Assured.
- Basic Sum Assured: ₹10,00,000.
- Annual Declared Bonus Rate: ₹49 per ₹1,000 SA = ₹49,000/year.
- Total Accrued Bonuses (21 Years): 21 × ₹49,000 = ₹10,29,000.
- Final Additional Bonus (FAB @ ₹100/1k SA): ₹10,00,000 × (100 ÷ 1,000) = ₹1,00,000.
- Total Maturity Payout at Year 21: ₹10,00,000 + ₹10,29,000 + ₹1,00,000 = ₹21,29,000 (100% Tax-Free).
- Lifetime Cover Post Maturity: Ramesh also continues to enjoy a free lifelong death cover of ₹10,00,000 until age 100!
Case 2: 25-Year Long-Term Compounding Powerhouse (₹10 Lakhs Sum Assured)
Sunita held a 25-year New Endowment policy with ₹10 Lakhs Sum Assured. Thanks to a 25-year tenure, her FAB rate leaped to ₹450 per ₹1,000 SA (adding ₹4.5 Lakhs in terminal bonus alone!).
- Sum Assured: ₹10,00,000.
- Accrued Bonuses (25 × ₹48,000): ₹12,00,000.
- FAB Payout (₹450/1k SA): ₹4,50,000.
- Grand Total Maturity Payout: ₹26,50,000 (2.65x the initial face cover!).
Case 3: Premature Death Claim in Year 8
Vikas had a ₹5 Lakhs Sum Assured policy and passed away in Year 8. His nominee received the Basic Sum Assured (₹5,00,000) plus all 8 years of vested bonuses (8 × ₹24,000 = ₹1,92,000), resulting in a total tax-free claim settlement of ₹6,92,000.
How LIC Generates Surplus & Declares Annual Bonuses
LIC generates its actuarial surplus through three primary operational engines:
- Investment Yield & Sovereign Compounding: LIC manages over ₹45 Lakh Crores in assets, allocating capital into Central & State Government Securities, AAA corporate debt, and bluechip equities (Nifty 50 constituents) that generate steady long-term dividend and interest yields.
- Favorable Mortality Experience: Actual death claim payouts across policyholder pools frequently come in lower than conservative actuarial projections, creating surplus savings.
- Expense Savings: Large operational scale across 2,000+ branches and digital self-service adoption reduce administrative overhead, leaving a higher net surplus for profit redistribution.
Impact of Policy Paid-Up Status & Surrender on Accrued Bonus
If financial emergencies prevent you from paying future premiums, understanding the impact on your accrued bonuses is essential:
- Paid-Up Policy: If premiums are paid for at least 2 full years, the policy does not lapse. All bonuses accrued up to the date of discontinuance remain intact and are paid at maturity alongside the Paid-Up Sum Assured. However, no new bonuses accrue for unpaid years.
- Policy Surrender: Surrendering your policy encashes both your paid premiums and accrued bonuses at a discounted Bonus Surrender Value Factor (typically 15% to 30% of total accrued bonus depending on remaining years to maturity). For exact calculations, visit our LIC Surrender Value Calculator.
- Policy Loan Facility: Up to 90% of your policy's surrender value (which includes accrued bonuses) can be borrowed at low interest rates without forfeiting your policy or future bonus accrual! Calculate loan eligibility with our LIC Policy Loan Calculator.
Tax Exemption Rules on LIC Bonus Payouts Under Section 10(10D)
According to the Income Tax Department of India:
- 100% Tax-Free Maturity Proceeds: The entire lump sum maturity payout (Basic Sum Assured + Accrued Reversionary Bonuses + Final Additional Bonus) is completely exempt from income tax under Section 10(10D).
- Zero Tax Deducted at Source (TDS): No TDS is deducted by LIC when paying maturity or death claim proceeds on eligible policies.
- Death Claim Exemption: Death claim payouts (including all vested bonuses) are 100% tax-free in all circumstances without any premium limits.
Historical 12-Year LIC Annual Bonus Declaration Trends (2014 to 2026)
LIC conducts annual actuarial valuations to assess its total liabilities and investment assets. Over the last decade, LIC's declared bonus rates have shown remarkable stability despite fluctuations in macroeconomic interest rate cycles:
| Valuation Year | Plan 914 / 814 (Term 21+ Yrs) | Jeevan Anand 915 (Term 21+ Yrs) | Jeevan Labh 936 (Term 25 Yrs) | Jeevan Umang 945 (Term 25 Yrs) | Money Back 921 (Term 25 Yrs) |
|---|---|---|---|---|---|
| 2025 - 2026 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | ₹47 / ₹1k SA | ₹52 / ₹1k SA | ₹44 / ₹1k SA |
| 2023 - 2024 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | ₹47 / ₹1k SA | ₹52 / ₹1k SA | ₹44 / ₹1k SA |
| 2021 - 2022 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | ₹47 / ₹1k SA | ₹52 / ₹1k SA | ₹44 / ₹1k SA |
| 2019 - 2020 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | ₹47 / ₹1k SA | ₹52 / ₹1k SA | ₹44 / ₹1k SA |
| 2017 - 2018 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | ₹47 / ₹1k SA | ₹52 / ₹1k SA | ₹44 / ₹1k SA |
| 2015 - 2016 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | ₹47 / ₹1k SA | - | ₹44 / ₹1k SA |
| 2014 - 2015 | ₹48 / ₹1k SA | ₹49 / ₹1k SA | - | - | ₹44 / ₹1k SA |
Participating Plans vs. Non-Participating Guaranteed Addition Plans
LIC offers two distinct mechanisms for delivering policyholder returns:
| Comparison Feature | Participating (With-Profits) Plans | Non-Participating Guaranteed Addition Plans |
|---|---|---|
| Popular Example Plans | New Endowment (914), Jeevan Anand (915), Jeevan Labh (936) | Bima Jyoti (860), Bima Ratna (864), SIIP (852) |
| Return Mechanism | Annual Simple Reversionary Bonus + FAB | Pre-contracted Guaranteed Additions (e.g. ₹50/1k SA flat) |
| Rate Fluctuations | Subject to annual actuarial valuation and market surplus | Fixed in advance in the policy bond; cannot change |
| Terminal Bonus (FAB) | Eligible for high FAB for tenures 15 years and above | No FAB (returns are strictly capped at guaranteed addition rates) |
| Suitability | Long-term wealth creation (15 to 30 years) with high loyalty bonus | Short-to-medium term guaranteed capital growth (5 to 15 years) |
How Accrued Bonuses Are Valued During Surrender or Policy Loans
Accrued bonuses directly increase your policy's liquidity value if you require emergency funds:
Strategies to Maximize Your LIC Bonus Returns & Real Yield (IRR)
To optimize the overall Internal Rate of Return (IRR) on your participating LIC policy, adopt these three proven planning strategies:
- Target a Policy Tenure of 21 to 25 Years: The official FAB rates scale exponentially after 20 years. For example, in a ₹10 Lakhs policy, a 20-year term offers ₹70,000 in FAB, whereas a 25-year term yields ₹4,50,000 in FAB - adding an extra ₹3.8 Lakhs in pure loyalty profit for just 5 additional years!
- Opt for Higher Sum Assured (₹5 Lakhs and Above): Policies with Sum Assured of ₹5 Lakhs and above receive the highest FAB slab rates (e.g. ₹450/₹1k SA vs ₹150/₹1k SA for small policies), plus high sum assured premium discounts (₹2 to ₹3 per ₹1,000 SA discount every year).
- Choose Yearly Premium Payment Mode: Paying annually provides a 2% rebate on tabular premium rates compared to monthly payments, directly increasing your net compounding yield.
How to Check Your Vested Bonus Online via LIC Customer Portal
You can easily verify your policy's accumulated bonus balance through official digital channels:
- LIC Customer Portal: Log in to the official LIC e-Services portal using your User ID and Password. Navigate to Policy Status > Bonus Details to view year-by-year credited bonus statements.
- MyLIC Mobile App: Open the MyLIC app, authenticate with biometric or MPIN, select your active policy number, and tap Bonus Information to download your formal bonus ledger.
- SMS / WhatsApp Service: Send
BONUS [Policy Number]to LIC's official SMS shortcode 56767877 or message LIC WhatsApp Helpdesk at 8976862090 from your registered mobile number.
Maturity Claim Settlement & Documentation Process
When your policy reaches its maturity date, follow this streamlined process to receive your Sum Assured, accumulated bonuses, and Final Additional Bonus:
- Form No. 3825 (Maturity Discharge Form): Duly sign the discharge voucher sent by your home branch.
- Original Policy Bond: Submit the original policy document for cancellation.
- NEFT Mandate & Bank Proof: Provide a cancelled cheque or bank passbook copy along with your bank IFSC code for direct electronic payout into your bank account.
- KYC Verification: Submit self-attested copies of your PAN Card and Aadhaar Card. Payouts are credited within 3 to 5 business days with zero TDS!
Frequently Asked Questions (FAQs)
What is a Simple Reversionary Bonus in LIC?
A Simple Reversionary Bonus is the annual profit share declared by LIC at the end of each financial year based on actuarial valuation. Once declared, it vests in the policy and is guaranteed to be paid on maturity or upon prior death of the life assured.
How is the LIC annual bonus calculated?
LIC declares bonus rates as a fixed rupee amount per ₹1,000 of Basic Sum Assured. For example, if your Sum Assured is ₹10,00,000 and the declared bonus rate is ₹46 per thousand, your annual bonus for that year is (10,00,000 × 46) ÷ 1,000 = ₹46,000.
What is Final Additional Bonus (FAB) in LIC?
Final Additional Bonus (FAB), also known as Terminal Bonus, is an extra one-time loyalty bonus paid by LIC on policies that run for a long duration (usually 15 years or more) at the time of maturity or death claim.
What is the difference between Simple Reversionary Bonus and Compound Bonus?
In a Simple Reversionary Bonus (which LIC uses for traditional endowment plans), bonus is calculated only on the Basic Sum Assured. In a Compound Reversionary Bonus, bonus is calculated on the Sum Assured plus previously accumulated bonuses.
What is an Interim Bonus in LIC?
An Interim Bonus is paid on policies that mature or result in a death claim between two consecutive annual valuation dates, ensuring the policyholder receives bonus credit for the fractional year elapsed.
What is Loyalty Addition (LA) in LIC plans?
Loyalty Addition is a special one-time profit addition declared for specific participating plans (such as Jeevan Saral Plan 165, Bima Bachat 916, or Aadhaar Stambh 943) in lieu of annual simple reversionary bonuses.
Can I withdraw my accumulated LIC bonus before maturity?
No, you cannot withdraw accumulated bonuses as standalone cash before maturity. However, if you surrender your policy or take a policy loan, the accrued bonus value is factored into the surrender value and loan eligibility.
Are LIC bonus payouts tax-free?
Yes, all vested bonuses and Final Additional Bonuses paid alongside maturity or death claims are 100% tax-free under Section 10(10D) of the Income Tax Act, provided annual premiums do not exceed statutory limits.
When does LIC declare its annual bonus rates?
LIC conducts its annual actuarial valuation following the close of the financial year on March 31st and officially publishes its declared bonus rates in August or September every year.
What happens to accrued bonuses if a policy becomes paid-up?
If a policy acquires paid-up status after paying at least 2 full years of premiums, all bonuses accumulated up to the date of discontinuance remain attached and are paid at maturity. However, no future bonuses accrue after the policy becomes paid-up.
Why do bonus rates vary based on policy term?
Longer policy terms allow LIC to invest funds in higher-yielding long-term sovereign assets and infrastructure bonds, generating greater surplus that translates into higher bonus rates for longer-tenure policies.
Which LIC plan currently offers the highest bonus rate?
Among traditional endowment plans, LIC Jeevan Umang (Plan 945) and LIC Jeevan Anand (Plan 915) historically command the highest declared bonus rates, reaching up to ₹50 to ₹52 per ₹1,000 Sum Assured for long terms.
Do ULIP plans like LIC SIIP get reversionary bonuses?
No. ULIP policies like LIC SIIP (Plan 852) or Nivesh Plus (Plan 849) do not receive reversionary bonuses; instead, their returns depend on market-linked fund NAVs and guaranteed milestone unit additions.
How does Sum Assured affect the Final Additional Bonus (FAB)?
FAB rates increase significantly with higher Sum Assured slabs (e.g. ₹2 Lakhs to ₹5 Lakhs, and ₹5 Lakhs & above) and longer policy tenures of 20, 25, or 30 years.