Bonus Guaranteed Addition in LIC

LIC of India offers several perks to policyholders of LIC plans. These extra incentives help policy owners increase their savings and enjoy higher returns at the time of maturity. Unlike the other forms of bonuses, Guaranteed Additions in LIC are added to the final fund value on death or maturity irrespective of LIC's valuations or profits earned. 

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What is Bonus Guaranteed Addition in LIC?

It refers to the extra amount that LIC adds to the basic sum assured. LIC defines a fixed rate of addition for some of its policies and it is 100% guaranteed. These additions accrue annually for a specific duration within the policy term. The final accumulated bonus amount is paid out to you or your family along with the maturity benefit or death benefit.

Which LIC Plans Offer Guaranteed Additions?

LIC bonus guaranteed additions come with the following insurance plans.

Name of Plan Type of Policy Rate of Guaranteed Addition Policy Years
LIC Bima Jyoti Endowment Plan Rs.50 per Rs.1,000 BSA 1st policy year to date of maturity
LIC SIIP Plan Unit-linked Insurance Plan (ULIP) 5%, 10%, 15%, 20%, 25% of the annual premium 6th, 10th, 15th, 20th, and 25th policy year
LIC Dhan Rekha Money Back Plan Rs.50 – Rs.60 per Rs.1,000 BSA 6th to 40 policy year
LIC Bima Ratna Endowment Plan Rs.50 – Rs.60 per Rs.1,000 BSA 1st to 25th policy year
LIC Nivesh Plus Unit-linked Insurance Plan (ULIP) 3%, 4%, 5%, 6%, 7% of the single premium 6th, 10th, 15th, 20th, and 25th policy year
LIC Bima Shree Money Back Plan Rs.50 & Rs.55 per Rs.1,000 BSA 1st policy year till the end of the premium paying term

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C Apply

The tax benefit is subject to changes in tax laws. Standard T&C Apply

How is Bonus Guaranteed Addition in LIC Calculated?

Let’s take a look at an example to explain this bonus calculation. Say that you are a 30-year-old male and want to invest in LIC Bima Jyoti. Considering that you want the following coverage -

  • Sum assured – Rs.1 Crore

  • Policy Term - 20 years

  • Premium Paying Term - 15 years

If you refer to the table above, you will find that the guaranteed addition rate for LIC Bima Jyoti is Rs.50 per Rs.1000 sum assured. Therefore, for a basic sum assured of Rs.1 Crore, your policy would have accumulated Rs. (50 x 1,00,00,000/1000) = Rs.5,00,000 every year.

Over a policy term of 20 years, your total guaranteed additions will amount to Rs.1 Crore, which will bring your final maturity value to Rs.2 Crores. You can calculate the maturity amount for other LIC policies using the LIC premium & maturity calculator for a clearer picture.

Can One Withdraw the Bonus Guaranteed Addition in LIC?

No, one cannot pre-maturely withdraw the accumulated bonus guaranteed addition. It is only paid out with the promised sum assured on maturity and death. However, in the case of a surrender, LIC will pay out the bonus amount that has accrued till the date of policy surrender.

How is LIC Bonus Guaranteed Addition Different From Other Bonuses?

Apart from Guaranteed Additions, LIC plans come with the following bonus options -

  • Simple reversionary bonus

  • Final additional bonus (FAB)

  • Loyalty additions

These bonus rates declared are on a profit-sharing basis. Depending on the valuation of LIC in a financial year and the profits earned, the company declares the LIC bonus rate for that year. It is neither fixed nor guaranteed. Therefore, most conservative investors opt for plans that come with guaranteed additions as there is no risk involved.

Most recently, the LIC bonus rate 2020-21 was declared as per the valuation done on 31st March 2020.

Summing Up!

Since bonus guaranteed additions in LIC are foolproof and come without any risk, you will have a clear idea of the maturity amount from the start. This helps in your financial planning for the future. It is, however, important to double-check the bonus rates before purchasing a policy.

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