Finance · Free tool
LIC Endowment Maturity
Maturity = Sum Assured + (Reversionary Bonus per ₹1000 SA × tenure × SA / 1000) + Final Addition Bonus. Bonus rates vary by plan; ₹40–50/₹1000/yr is typical for traditional plans.
Check your policy bonus chart. ~₹45 typical.
0 for short tenures, 100-200 for 20+ years.
Effective return is typically 4-6% — same money in PPF (7.1%) or ELSS (~12%) usually beats it.
How LIC maturity is calculated
Traditional LIC endowment plans pay Sum Assured + Reversionary Bonus + Final Addition Bonus (FAB) at maturity. Reversionary bonus accrues each year at a rate declared by LIC's valuation surplus — typically ₹40–₹50 per ₹1,000 SA per year for plans like Jeevan Anand, New Endowment (Plan 914), Jeevan Labh. FAB is paid once at maturity (or death after 15 years) and ranges ₹200–₹800 per ₹1,000 SA depending on tenure.
Worked example
Sum Assured ₹10 lakh, 20-year endowment, bonus ₹46/₹1,000 SA/year, FAB ₹450/₹1,000 SA. Maturity = 10,00,000 + (10,00,000 / 1,000 × 46 × 20) + (10,00,000 / 1,000 × 450) = 10,00,000 + 9,20,000 + 4,50,000 = ₹23,70,000. Annual premium ~₹50,000 means total outflow ~₹10 lakh; net return works out to about 5.0–5.5% IRR — tax-free under section 10(10D) if premium ≤ 10% of SA, but well below what term insurance + a 12% equity SIP would yield separately.
When to use this
- Reconciling the maturity number quoted by the LIC agent against actual bonus declarations
- Deciding whether to surrender a 5–10 year old policy or continue paying premiums
- Comparing endowment IRR against term insurance + SIP separately to size the opportunity cost
For pure protection use a term plan; for a comparable wealth alternative, see the PPF calculator (~7.1% tax-free) or our blog on PPF vs ELSS vs NPS.
FAQ
Why are LIC endowment returns only 4-6%?
A large portion of your premium goes to mortality cover and agent commission (5-15% in early years). Only the residual is invested — and traditional plans invest mostly in govt bonds (low return). Term + MF separately is more efficient.
Are LIC bonuses guaranteed?
Reversionary bonus is declared annually and once added, becomes guaranteed. Final Addition Bonus (FAB) is at maturity, not guaranteed in advance — but historically paid for long-tenure plans.
Can I surrender my LIC policy mid-way?
Yes after 3 years. Surrender value is ~30% of premiums paid for the first 3 years; rises with tenure. Usually you lose money — sometimes better to make it paid-up (stop premiums but keep cover).