Bonus Guaranteed Addition in LIC

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. 

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What is Bonus Guaranteed Addition in LIC?

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.

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.

FAQ's

  • Q: How does the LIC Guaranteed Additional Bonus work?

    Ans: The Guaranteed Additional Bonus is calculated based on the sum assured, policy term, and other factors. It is added to the policy's maturity or death benefit, enhancing the overall returns.
  • Q: Is the Guaranteed Additional Bonus offered by LIC guaranteed to policyholders?

    Ans: Yes, as the name suggests, the LIC Guaranteed Additional Bonus is guaranteed, and policyholders are entitled to receive it as long as they meet the specified conditions of their policy.
  • Q: What types of LIC insurance policies are eligible for the Guaranteed Additional Bonus?

    Ans: The eligibility for the Guaranteed Additional Bonus may vary depending on the specific LIC policy. Generally, it is available for participating and some non-participating policies.
  • Q: When is the Guaranteed Additional Bonus paid out to policyholders?

    Ans: The Guaranteed Additional Bonus is typically paid out at the time of policy maturity or in the event of the policyholder's death, depending on the policy's terms and conditions.
  • Q: How is the amount of the Guaranteed Additional Bonus determined?

    Ans: The amount of the Guaranteed Additional Bonus is determined by various factors, including the sum assured, policy duration, and the performance of the participating fund associated with the policy.
  • Q: Can I calculate the potential Guaranteed Additional Bonus for my LIC policy?

    Ans: Yes, you can calculate the expected Guaranteed Additional Bonus for your LIC policy by referring to the policy documents or by contacting LIC's customer service.
  • Q: Are there any specific conditions or criteria to qualify for the Guaranteed Additional Bonus?

    Ans: The specific conditions and criteria for qualifying for the Guaranteed Additional Bonus may vary by policy. Generally, the policyholders need to pay all premiums as per the policy terms to receive the bonus.
  • Q: How does the Guaranteed Additional Bonus enhance the overall returns of an LIC policy?

    Ans: The Guaranteed Additional Bonus enhances the overall returns of an LIC policy by providing an additional lump sum benefit, which increases the total payout at maturity or in the event of the policyholder's death.

*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
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
++Returns are 10 years returns of Nifty 100 Index benchmark

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