LIC bonus — how it works
Bonus is the most misread word in Indian life insurance. It is not interest, it is not credited to an account you can draw on, and it is not promised. It is a share of the surplus of the participating fund, declared by LIC each year after its actuarial valuation, and attached to your policy until the policy pays out.
That last part is the one that surprises people. A bonus declared in your policy’s fifth year is not money you can take in the fifth year. It accrues, and it is paid with the sum assured on death or on maturity. Surrender the policy early and you receive a reduced share of what accrued, not the face value of it.
Simple reversionary bonus
The annual one. It is declared as a rupee amount per ₹1,000 of sum assured, for each plan and policy term separately, and once declared for your policy year it attaches permanently and cannot be taken back.
Because it is a rate per thousand of sum assured rather than a rate on the value already built up, it does not compound. Two policies with the same sum assured accrue the same reversionary bonus regardless of how much either has accumulated.
Final additional bonus
A one-off amount added at the very end, on maturity or death, and only on policies that have run a long time. It is declared separately from the annual bonus and can be a large share of the total payout on a long-held policy.
It is also the least predictable element of the return, which is why any illustration of what a policy will pay decades from now should be read as an illustration and nothing more.
Why no bonus rates are published here
LIC declares its bonus rates annually and they vary by plan and by policy term. A rate copied onto a website is out of date the following year, and a stale bonus rate presented as current would materially mislead anyone using it to estimate a maturity value.
Bonus rates come from LIC’s own declaration. Where a plan’s brochure sets out an illustration, that illustration appears on the plan page as LIC published it, with its stated assumptions intact.
Plans that participate in profits
Taken from the plan type line of each brochure, where LIC states whether the plan is participating ("Par") or not. Plans whose brochure did not state it are left out rather than guessed at.
LIC's Bima Shree
UIN 512N316V03
View plan →Endowment plansLIC's Jeevan Labh Plan
UIN 512N304V03
View plan →Endowment plansLIC's Jeevan Lakshya
UIN 512N297V03
View plan →Money back plansLIC's Jeevan Tarun
UIN 512N299V03
View plan →Whole life plansLIC's Jeevan Umang
UIN 512N312V03
View plan →Endowment plansLIC's New Endowment Plan
UIN 512N277V03
View plan →Endowment plansLIC's New Jeevan Anand
UIN 512N279V03
View plan →Money back plansLIC's New Money Back Plan- 20 Years
UIN 512N280V03
View plan →Money back plansLIC's New Money Back Plan-25 years
UIN 512N278V03
View plan →Endowment plansLIC's Single Premium Endowment Plan
UIN 512N283V03
View plan →Work out your numbers
Each of these shows the formula it used and the assumptions it made, so you can check the result rather than trust it.
Common questions
- Is the LIC bonus guaranteed?
- No. A bonus is a share of the surplus in the participating fund and is declared each year at LIC’s discretion after its actuarial valuation. Once declared and attached to your policy it cannot be withdrawn, but no future bonus is promised, and any projection of one is an illustration rather than a commitment.
- Can I withdraw my accrued bonus each year?
- No. Accrued bonus is paid out with the sum assured when the policy pays a death or maturity claim. It is not an account you can draw from annually. If you surrender the policy early you receive a reduced share of the accrued bonus, not its full value.
- Do all LIC plans pay a bonus?
- Only participating plans do — LIC marks these "Par" in the plan type line of the brochure. Non-participating plans do not share in the fund’s surplus and pay no bonus; what they pay instead is defined in the policy contract, which is why a guaranteed non-par plan can be the more predictable choice even though it pays no bonus at all.
Go deeper
What do I get if I surrender my policy early?
Less than you paid in, in almost every case, especially in the first few years. Here is how surrender value is actually worked out.
Read the answer →What exactly does my family get if I die?
It is usually not simply "the sum assured". Here is how the death benefit is actually built up.
Read the answer →Still deciding?
You can work through all of this yourself — that is what the calculators and plan pages are for. If you would rather talk it through with someone who does this for a living, that is available too.