Getting something extra always gives us pleasure and LIC follows this strategy to retain its clients. LIC shares its valuation profit or surplus to its policyholders in the form of loyalty additions and bonuses.
Here we are discussing loyalty additions calculation for LIC Bima Bachat policy in detail.
Loyalty Additions (LA) is a profit that is shared by the Life Insurance Corporation (LIC) among its policyholders in the form of a one-time payment, in case of a death claim or maturity. The LA is declared at the rate of thousands of SA for a specific term of the policy every year. Also, this rate applies to such plans which are going to be claimed because of the policyholder’s death or completion of the plan tenure i.e., at the time of maturity.
LIC Bima Bachat is a one-time assured return scheme that returns the single premium along with the loyalty additions (if any). It is a non-linked, participating, savings cum protection policy where the premium is paid in a lump sum payment at the beginning of the policy. It also provides financial assistance against death during the policy tenure.
In case of death of the policyholder or maturity of the policy, the death benefit or maturity benefits respectively is paid along with the loyalty additions. The calculation of death and maturity benefit along with LA is mentioned below:
In case of policyholder’s demise, the death benefit is payable during the policy tenure as follows:
In case of death at the time of 1st five years of policy: In this only sum assured on death is payable.
In case of death after the completion of 5 plan years: In this, sum assured on death along with loyalty additions are payable.
Upon survival of the policyholder to the end of plan tenure, the sum assured on maturity along with the loyalty additions are payable.
Based on the experience of a corporation, the insurance plan shall participate in the proceeds of the company and shall be entitled to loyalty additions. The loyalty addition shall be payable on the policyholder’s demise after the completion of 5 years or on the survival of the policyholder to maturity at such rate and certain T&Cs as declared by the company.
To understand loyalty addition, let’s take LIC rates of Loyalty additions in a table. This means that if a policy is getting matured or going to claim death benefit after the policyholder's demise, then loyalty additions will be paid as per the following rates:
|Policy Term||Loyalty Additions for Rs. 1000 of Maturity SA|
In the above-mentioned table, if the LIC policy is with 16 years of the policy term and the plan is getting matured in a fiscal year, then loyalty additions will be Rs. 640 for 1000 of sum assured on maturity. Now, if there is a plan with a maturity SA of Rs 1 lakh and a policy tenure of 16 years. So, the loyalty additions will become 1 lac X 640/1000 = Rs. 64000.
If in case the policyholder dies in the 10th year of policy then the applicable rate of loyalty additions will be 425 and total loyalty additions will be 1lac X 425/1000 = 42,500.
The below table illustrates the LIC Bima Bachat loyalty addition calculation for your easy understanding:
|Entry Age||35 years|
|Policy Term||9 years|
|Premium payment mode||Single|
|Single premium (exclusive of taxes)||72540|
|Year-end||Premium paid till year-end||Guaranteed Benefits||Loyalty Additions||Full maturity benefits (including Loyalty Additions)||Full Death Benefit (including Loyalty Additions)|
|SA/ Survival benefit on maturity||SA on death||Case 1||Case 2||Case 1||Case 2||Case 1||Case 2|
|1||72540||0||1 lac||0||0||-||-||1 lac||1 lac|
|2||72540||0||1 lac||0||0||-||-||1 lac||1 lac|
|3||72540||15000||1 lac||0||0||-||-||1 lac||1 lac|
|4||72540||0||1 lac||0||0||-||-||1 lac||1 lac|
|5||72540||0||1 lac||0||0||-||-||1 lac||1 lac|
|6||72540||15000||1 lac||0||5000||-||-||1 lac||105000|
|7||72540||0||1 lac||0||6000||-||-||1 lac||106000|
|8||72540||0||1 lac||0||7000||-||-||1 lac||107000|
|9||72540||72540||1 lac||0||10000||72540||82540||1 lac||110000|
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C applies.
LIC Bima Bachat plan offers loyalty additions depending on the corporation’s experience and the policies shall participate in the company’s profits, thus getting eligible for loyalty additions. In case of death, loyalty additions are paid after 5 years of policy at a certain rate and terms and conditions, as declared by the insurer. LIC Bima Bachat loyalty addition calculation method is also discussed in the above section. Go through it and choose your plans wisely.
*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