Guaranteed Additional Bonus (GAB) is a feature offered by Life Insurance Corporation of India on some of its participating life insurance plans. It is added to the sum assured on maturity or death of the policyholder, irrespective of LIC's investment performance.Read more
Bonus Guaranteed Addition in LIC is a unique feature that offers policyholders a guaranteed increase in their LIC policy's value. Unlike other bonuses that are dependent on LIC's financial performance, GBA is a fixed rate of addition that is predetermined and guaranteed to be paid out. This additional benefit accrues annually, accumulating over the policy term and significantly enhancing the policy's overall value .
The advantages of GBA extend beyond the guaranteed increase in policy value. It gives policyholders peace of mind, knowing they will receive an additional payout regardless of LIC's financial performance. It also enhances the maturity benefit, ensuring a larger payout for those who hold their policy to maturity. Additionally, GBA can make surrendering a policy more attractive, as policyholders will receive a higher surrender value due to the accumulated bonus.
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
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.
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.
Apart from Guaranteed Additions, LIC plans come with the following bonus options -
Simple reversionary bonus
Final additional bonus (FAB)
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.
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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*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
+Returns Since Inception of LIC Growth Fund
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