How to Check the Maturity Amount of LIC Policies?

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Being a pioneer in the industry, people trust them when it comes to insurances. But apart from the trust factor, one should also pay attention to terms like “Maturity Value” when buying policies. The term “Maturity Value” in general refers to the final amount that the policyholder or investor will receive at the end of the term. At many times, the maturity amount is amortized, but, in policies, it is paid in lump sum along with bonuses. 

It is very easy to calculate. And one can do it using Excel Template, formula, or LIC calculator. One can try calculating it beforehand to get an idea of what the benefit will be at the end of the period. This can help in understanding whether the policy meets the needs and requirements. 

The LIC plans can be categorized into With Profit Plans and Without Profit Plans. In the former one, Bonuses are included with the Maturity Benefit. Whereas in the latter, only the Sum assured is paid at the maturity of the term as Maturity Benefit.   

What is the Maturity Value of LIC Policies?

There are two important things that a policyholder decides on when buying a policy is the term and the Sum Assured to be received at the end of the term. Age is a major determiner of the policy term, and the Sum assured. And the premium amount depends on the policy term that is bought. The insured is obligated to timely make online payment of LIC premiums.

The Maturity Values in the With Profit Plans usually constitute the Sum Assured, Bonuses received during the term of the policy, and any Final Addition Bonus that is declared. In case the policyholder dies after the policy maturity, then the nominee will also receive an additional amount equal to the Sum Assured as a Death Benefit. But, if the insured beforethe term ends, then the Death Benefit paid to the nominee constitutes of the Sum Assured, any Final Addition Bonus, and Vested Bonus until the death date. 

The Bonuses are declared depending on the insurance company’s performance and profit during the term. And a Final Addition Bonus (FAB) is the final bonus paid at the maturity of the term alongside the Bonuses. The Sum Assured as Death Benefit is higher one among the two

  • 10 times of the annual online payment of LIC premiums, or
  • 125 percent of the Initial Sum Assured. 

And the minimum bracket is 105 percent of the total online payment of LIC premiumstill the date of death.

When one tries to claim the maturity benefit, make sure to correctly fill the discharge form and attach the needed documentation, and submit it at least 1 month before the term end date. 

How is Maturity Calculated?

The exact Maturity Value cannot be calculated but one can calculate a close estimate of the value to get an idea of the benefit at the end of the term. The basic format is Sum Assured + Bonuses + Final Additional Bonus (if declared). 

An example for calculation demonstration:

Mr Z buys a policy of Sum Assured 15 Lakh with a term of 20 years. The insurance company includes Bonuses and Final Additional Bonus in the maturity value as per their company policy. The Bonus declared annually is Rs. 42/1000 sum assured. And the FAB for a similar policy and term is 22/1000 Sum Assured.

First, calculate the Bonus and FAB(Final Addition Bonus).

Bonus= (15,00,000/1000) x 42 x 20 

= 12.6 Lakh

FAB= (15,00,000/1000) x 22

           = Rs. 33,000

Maturity Value= 15,00,000+12,60,000+33,000

= 27,93,000 Lakh

(* the rates and values used are, for example, the same rate is not applicable. It can be higher or lower every year). 

Thus, if the policyholder is alive, they will receive 28 lakhs (approx.) at the maturity of the term. Also, if they die after the policy term, the nominee will receive the 15 lakhs Sum Assured as Death Benefit. 

Keep in mind that every policy has its own terms and features based on the Sum Assured, Term, Age, and the online payment of LIC premiums. Thus, the Bonuses and FAB may differ based on the policy. 

How to use a Maturity Value Calculator to Calculate the Maturity of LIC Policies?

The LIC calculator is the simplest way of calculating the Maturity Value of the LIC policy plan. One will need to carefully input the right information related to the policy, and, with one click, the maturity value will be provided. Based on the policy plans, the Bonuses, FAB, and other benefits will be determined so one will not have to provide these details.

The following information and values need to be put in the LIC calculator:

  • Sum Assured- The Basic Sum Assured mentioned in the policy document is the most important value required in the calculator. 
  • Policy plan- There are multiple policy plans under LIC. Therefore, one needs to mention the plan so that the benefits along with the Bonuses can be determined. Make sure to correctly select the plan name from the drop-down list.
  • Term- The term of the policy plan will also be mentioned in the original plan document. And also, the year of the policy purchase needs to be provided. 
  • Name- The policyholder's name. 
  • Contact details- The policyholder’s updated contact number.
  • Date of birth- The policyholder’s date of birth.

As soon as all the details are correctly filled in, click on the "Calculate Maturity" button. Once the page loads, the policyholder will have the following information displayed on the screen- Sum Assured, Bonus, the age at maturity, maturity year, and lastly, the Total Maturity Value.

The Benefit of using the LIC Maturity Value Calculator

TheLICcalculatedcan be used to calculate the maturity value of any kind of plan- children plans, endowment plans, single-premium plans, etc. Compared to other methods, using the maturity calculator is the fastest and most effective way of finding out how much one is entitled to claim at the end of the term of the policy plan. 

One can also surrender the LIC policy plan, but it can only be done after 3 years of timely premium payments. For that, the policyholder needs to provide documents such as the original policy document, correctly filled LIC policy surrender form, and identification documents. One can also use the LIC calculator to calculate the surrender value. But it is advisable to not surrender the policy because the value received at surrender is proportionately lower than the Maturity Value.

The Final Verdict

Many times people confuse the Sum Assured with the maturity value. This is why, before buying any policy plan, make sure to familiarize oneself with various terms so that the policy features and terms are clear. Knowing what Maturity value is and how it is calculated can be very helpful to figure out if the policy plan is fit for one. Using the formula or the LIC calculator for calculation is up to the policyholder.

FAQ's

  • Q: What is the Maturity Date mentioned in LIC policies?

    Ans: The maturity date is the date on which the policy or bond matures. On this day, the insured or investor receives the principal amount in lump sum along with any residual returns and benefits. The policy or financial instrument expires on this day, and one stops receiving the regular interest payments. The books are settled on both ends. The policyholder usually receives the Maturity Benefit days before this maturity date.
  • Q: How can one claim the maturity amount after the policy matures?

    Ans: Around 1-2 months before the policy expires, the insured will receive a Discharge Form from the insurer. Along with the form, there will be a letter attached that will list the required documents that one needs to submit, along with the form. As an insured, one needs to diligently fill the Discharged Receipt Form No. 3825 and submit it with the original policy document and other documents a minimum of 1 month before the policy expires. This way, one can claim the maturity amount earlier than the expiration date.
  • Q: How much maturity benefit can one expect on the expiration of the LIC policy?

    Ans: If the insured or policyholder meets the terms of the policy at the expiration of the policy, they are entitled to receive 40% of the initial Sum assured in addition to various related bonuses and also the additional bonus amount. One can end the suspense of maturity value by calculating it themselves using the LIC calculator. This way, they will have an idea of the Sum expected at expiration when signing the policy documents.
  • Q: Is the maturity benefit received at the end of the term taxable?

    Ans: If the terms of the policy fall under the following two conditions, then the lump sum received along with any bonus will be fully exempt under Income Tax Act, Section 10(10D):
    • Policy issued before 1 April 2012, and the LIC premiums are within 20% of the lump sum assured.
    • The policy is issued after 1 April 2012, and the online payment of LIC premiums is within 10% of the lump sum assured.

    In Death Benefit, the amount received is exempted from taxation under the Income Tax Act, Section 10(10D). There is no minimum or maximum bracket for exemption eligibility.

Written By: PolicyBazaar - Updated: 26 October 2021
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