LIC Maturity & Surrender Value Calculator

A reversionary bonus is the share of LIC's annual surplus distributed to policyholders of participating (with-profits) plans. Once declared in a year, it is guaranteed — it cannot be taken back, only added to. LIC declares it as a per-₹1000-of-Sum-Assured amount each financial year (typically March, after actuarial valuation).

For example: if LIC declares ₹48 per ₹1000 in a year on Jeevan Anand, a policyholder with ₹10 lakh SA accrues ₹48 × 1000 = ₹48,000 of bonus that year, locked in until claim or maturity. The bonus rate varies by plan and policy term — longer terms typically see higher rates. The rate is NOT a return on premiums paid — it is calculated on the Sum Assured, which is why endowment-plan effective yields are typically lower (4-5% p.a.) than equity mutual funds (10-12% p.a.).

Final Additional Bonus is a one-time terminal bonus LIC pays at maturity or on death of the life assured — on top of the reversionary bonuses already accrued. It is NOT payable on surrender. FAB is per ₹1000 of Sum Assured and grows with policy duration: ₹0 for terms under 15 years, ₹100 for 15-19 years, ₹350 for 20-24 years, ₹650 for 25-29 years, and ₹1100 for 30+ years (long-run averages from LIC bonus circulars 2020-2025).

FAB is LIC's way of rewarding long-tenure policyholders — surrender early and you lose it entirely. For a ₹10 lakh, 25-year endowment policy, FAB alone adds ₹6.5 lakh to the maturity payout.

LIC pays the higher of two formulas — the Guaranteed Surrender Value (GSV) and the Special Surrender Value (SSV). GSV is a fixed percentage of total premiums paid: 0% in years 1-2 (policy LAPSES — surrender only after Year 3), 30% in Year 3, 50% in Years 4-7, and 70% in Year 8 onward. Excludes the first-year premium for premium-paying-term plans.

SSV is LIC's internal 'more generous' formula based on paid-up Sum Assured plus the cash value of accrued bonuses — typically beats GSV beyond Year 8. Both formulas exclude Final Additional Bonus, which is paid only at maturity. As a result, surrendering a 20-year policy at Year 10 typically returns 50-60% of total premiums paid plus a fraction of accrued bonuses — substantially less than waiting for full maturity.

Pure equity mutual fund SIPs have delivered roughly 12% per year over 20+ year periods historically — substantially higher than LIC endowment effective yields of 4-5% per year. For a ₹50,000 annual outflow over 20 years: an LIC Jeevan Anand policy with ₹10 lakh Sum Assured matures at ~₹23.1 lakh, while the same ₹50,000 invested in a Nifty 50 index SIP at 12% p.a. grows to ~₹40 lakh — a ₹17 lakh gap.

The trade-off is what LIC bundles in: a guaranteed maturity payout, plus life insurance cover (Sum Assured paid to nominee on death of life assured during the policy term), plus Section 80C tax deduction on premiums. SIP gives higher returns but zero life cover. The widely recommended approach is to buy term, invest the rest — buy a pure term insurance policy for life cover (10-15× annual income at ~₹15,000/year for a 30-year-old) and route the rest into equity SIPs for better long-run wealth creation.