LIC Bonus Rates For 2021-22

LIC Bonus Rates

As incentives for buying its policies, the Life Insurance Corporation of India (LIC) started adding bonus amounts to the death and maturity benefits. These significantly increased the final payouts of the plan, meaning that policyholders could now enjoy larger savings.

Some important things to know about LIC bonus rates are:

• Only policyholders of LIC participating plans are entitled to these extra additions by way of sharing in the profits of the company.

• The profits are shared in the form of bonuses or dividends which are paid out annually at the time of maturity or with the death benefit.

• The bonus offered is not guaranteed or constant throughout the complete policy term and depends on multiple factors.

Factors that Affect Bonus Ratesin LIC

• Choice of Policy – The valuation for each applicable policy is done separately, therefore, the rates vary across them.

• Policy Term – There is a time benefit that comes with a longer policy term. The higher the term, the higher the bonus rate.

• Sum Assured – If you buy a policy of high sum assured, then the bonus accumulation will also be on a higher side.

Types of Bonuses in LIC 2021-22

Here are the different types of bonuses offered by LIC.

1. Simple Reversionary Bonus - SRB

   It is a vested bonus in LIC that is announced by the insurer every year. The SRB accrues over the years and the accumulated sum is added to the plan account. The simple reversionary bonus declared by LIC is available to the life assured at the time of death and maturity. If a policyholder wants to surrender the policy, only a part of the whole accumulated bonus will be provided based on the surrender charge offered at that period.

2. Final Additional Bonus – FAB

   The LIC Final Additional Bonus is paid along with the SRB announced and then, added to the account of the policy. It is a one-time addition to the death and maturity benefit.

3. Loyalty Additions

   These additions are payable only once during the policy term on the condition that the policyholder continues with the policy for a specified duration. Plans that offer loyalty additions generally do not come with SRB. Further, it is only offered when one exits the policy by way of death, maturity, or surrender.

Calculation of LIC Bonus Rate 2021-22

For example, you buy aLIC policyto enjoy coverage for 21 years and assure a basic sum of Rs.10 Lakhs. The bonus rate on a product is Rs.45 per 1000 of the sum assured, then the calculation will be as follows -

Total Bonus for 21 years = (10,00,000 X 45/1000) X 21 = Rs.9,45,000

This brings the final maturity amount to Rs.19,45,000.

LIC Bonus Rates for 2021-22

LIC bonus rates for 2020-21 were last declared as per the company's valuation in March 2021. The below table of reversionary bonus rates is only applicable for policies that are in force for the complete sum assured as of 31st March 2021. These rates are applied to the policies that result in claims by maturity/ death or surrendering the policy on or after 31st March 2020.

Let’s discuss the bonus rates of some of the active LIC insurance plans:

Here are a few plans that are now withdrawn but can still earn the LIC bonus rate 2021-22.

Wrapping It Up!

LIC recently announced the bonus rates for 2021-2022 based on its surplus funds in the previous year. Along with the 3 types discussed, some policies come with bonus guaranteed additions to the basic sum assured. Unlike SRB, the rate of guaranteed additions remains constant throughout the policy term, irrespective of its valuation in a financial year.