Are you wondering how to calculate the return value of your lic policy? Is your LIC agent promised a massive return on your investment? Then you should cross check your agent’s words without blindly believe his/her words. In this article I will try to simply the calculation of maturity value of any lic policy with simple example only.
As an investor one should always follow a simple thumb rule and that is how the return or any any promised benefit is calculated. If you don’t understand the same or your agent is not able to make you understand then you should skip such products immediately. Although as per the basics of insurance, one should not expect any return on investment, but this is not true when people buy lic policy.
Things You Should Know About LIC Policy Return Calculation
First of all, you should know what are the factors which is determining the return of any lic policy or maturity value of any lic policy. In fact this is the fact for any other insurance products other lic of India. Mainly lic policies return is solely depending on t he bonus amounts only. Here are the popular bonus terms your agent might have explained to you.
Simple Reversionary Bonus: This is nothing but the typical lic policy bonus that we are talking all the time. LIC is declaring the bonus rate every year of their entire policies covering new lic plans or old discontinued policies. You can check out the latest LIC policy bonus rate for 2014-15 from their official website itself. Generally this is nothing but the rate at which one will get a return on maturity. E.g. for LIC New Jeevan Anand policy the bonus rate for a 20 year term plan is Rs 49/1000 sum assured. That means in case you buy a policy of sum assured value 10 lakh your bonus will be Rs 10 lakh X 49/1000 X 20 years = 9,80,000.
Final Additional Bonus (FAB) or Terminal Bonus: This is also another kind of bonus which is changing every year as per LIC declaration. FAB is applicable only for those policies who has no guaranteed addition and with policy term 15 years or more than that. And also one need to pay every single premium till the policy term end. You can check out the same lic bonus rate page to get the information on FAB as per current year.
Loyalty Additions & Guaranteed Additions (GA): Again both are 2 different types of bonus which is also calculated as per 1000 of sum assured value. When loyalty addition for all trusted lic customers, the guaranteed addition will be clearly mentioned in the policy document only.
Note: All these bonus is not applicable together for a single lic policy. Please read your policy document carefully to know for which bonus your policy is eligible. You can also ask your LIC agent or inquire about the same in your nearest lic branch.
How To Calculate LIC Policy Return & Maturity Benefits
Here I will share the step by Step guide which will help you to find out how much return your lic policy will give to you in long term.
Step 1: Visit LIC policy premium calculator page & select the policy for which you want to calculate premium and return value.
Step 2: Provide necessary details like policy term, your age, sum assured value etc & then click on calculate button.
Step 3: You will easily get a table where you can find premium amounts are listed including service tax amount for yearly, half-yearly & monthly terms. Consider the amount as per your premium payment schedule only.
Step 4: Next multiply that amount with the policy term to find out how much money you are actually contributing by paying premiums. Then consider the bonus rate of that policy and find out the total bonus amount for the entire policy term. You can refer to the lic bonus rate page mentioned above to find other bonus details.
Step 5: Now add all these values and your total amount after maturity of the policy term will be ready. Remember that this is just an example and actual figures may differ. And one more thing, you should not add all the 4 types of bonus rate mentioned above. Mostly you will find that only 2 types of bonus or at max 3 will be applicable only and you should know the bonus eligibility first by reading the policy documents clearly.
I hope I am able to make things simple here. Do you find this calculation useful and able to find out your lic policy return? Share your thoughts or any query related to lic policy return calculation here by writing a simple comment below. Thanks for reading & sharing the same.