LIC Bonus Rates For 2021-22

LIC Bonus Rates

The Life Insurance Corporation of India introduced bonuses as incentives for purchasing its policies, augmenting death and maturity benefits. These bonuses substantially boosted the final payouts of the plans, offering policyholders larger savings. This enhancement means policyholders can now benefit from increased maturity or death benefits, thereby enhancing financial coverage for themselves and their families.

Some important things to know about LIC bonus rates are:

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

• The profits are shared as bonuses or dividends, paid out annually at maturity or with the death benefit.

• The bonus offered is not guaranteed or constant throughout the policy term and depends on multiple factors, such as the type of policy chosen and the policy term.

LIC Bonus Rates for 2021-22

LIC bonus rates for 2020-21 were last declared per the company's valuation in March 2021. The table below of reversionary bonus rates only applies to policies in force for the sum assured as of 31st March 2021. These rates are applied to 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Here are a few plans that are now withdrawn but can still earn the LIC bonus rate 2021-22.

Factors Affecting LIC Bonus Rates

Below mentioned are the factors that affect the bonus rates of LIC:

• Choice of Policy – The valuation for each applicable policy is made separately. Therefore, the rates vary.

• Policy Term – A longer policy term offers a time benefit. The higher the term, the higher the bonus rate.

• Sum Assured – If you buy a policy with a high sum assured, the bonus accumulation will also increase.

• Investment Performance - LIC's investment returns directly impact the bonus rates. Higher returns mean higher bonuses for policyholders.

• Economic Environment - Factors like interest rates and economic growth affect LIC's investments and overall financial health, influencing bonus rates accordingly.

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 the insurer announces every year. The SRB accrues over the years, and the accumulated sum is added to the plan account. The simple reversionary bonus LIC declares is available to the life assured at death and maturity. If a policyholder wants to surrender the policy, only a part of the 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 added to the policy account. 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 if the policyholder continues 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 through 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.

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 offer 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.

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