Recently LIC declared the bonus rates for the year 2022 – 2023 (As per March 2022 valuation). Let us see the complete details about LIC Bonus Rates – 2022- 2023 and how they affect your life insurance returns.

LIC of India has declared the latest bonus rates for the valuation period **1 st April 2021** **to** **31st March 2022**.

## Meaning of bonus for LIC policies

When you buy a traditional with profit product from LIC, then your returns from such policy mainly depend on what will be the rate of bonus. LIC declares bonus on the yearly basis. Usually, you will not find any such drastic change. But it is always better to track the bonus rates.

Let us say you bought LIC’s Jeevan Anand for the term of 20 years and the sum assured as Rs.5,00,000. If LIC declared a bonus as Rs.45 for this product, then the calculation will be as below.

The bonus rates will be based on three criteria.

**# Term of policy**-Higher the tenure means higher the rate.

**# Sum Assured**-LIC bonus depends on per Rs.1,000 of Sum Assured. Hence, if you bought higher sum assured policy, then your bonus accumulation will be at the higher end.

So from above example, if LIC declared you Rs.45 as bonus per Rs.1,000 sum assured for 20 years policy, then the bonus accumulation for that year will be as below.

Rs.22,500=(Rs.45 x Rs.5,00,000)/Rs.1,000.

Remember this Rs.22,500 will not be payable to you. But it will be with LIC and you receive this amount during the time of death claim or maturity. The most important point to note is that they will not add any amount on this Rs.22,500. It will remain the same till the period of death claim or maturity date.

There are various types of benefits LIC policies offer Bonus, Loyalty Addition, or Final Additional Bonus.

## Types of LIC benefits

**# Simple Reversionary Bonus**

LIC will declare this on yearly basis and added to your policy account. You will get it either at maturity or if there is a death claim. If you decide to exit from the policy during the policy period by surrendering it, then a certain portion of such accrued bonus will be payable to you. Do remember that this type of bonus does not compound every year and hence it is called a simple reversionary bonus.

**# Final Additional Bonus (FAB)**

Final Additional Bonus (FAB) is a one-time add**itional bonus**, which is paid along with the maturity amount. It is an additional one-time bonus along with the simple reversionary bonus and is added to the policy account. As I told you, it is a one-time payment you will receive at maturity, a death claim if you surrender it (one year preceding the date of maturity).

**# Loyalty Bonus (LA)**

Based on the policy features, certain LIC policies are eligible to avail of this LA. LA is also a one-time payment kind of benefit. Unlike the simple reversionary bonus, which becomes a part of the policy benefits as and when it is declared, loyalty additions shall be available to the policyholder only at the time of exit from the policy. Hence, they became the part of policy benefit at once during the policy exit (due to maturity, death, or surrender)

## How to calculate returns for your LIC policy?

In simple, I explained how to calculate a bonus for a year. But LIC offers different products like endowment, limited endowment, or money-back plans. In such a situation, you may find it difficult to calculate returns on your LIC plan. Hence, I created a video about this.

The below video will explain to you how to calculate returns on your LIC plans using an excel sheet. It is too simple and convenient for you to calculate.

## LIC Bonus Rates – 2022- 2023 | Complete List

Hope you got clarity about the importance of bonus rates for your traditional plans. Now let us concentrate on recently declared LIC Bonus Rates – 2022- 2023.

The below reversionary bonus rates are applicable for the policy year entered upon during the inter-valuation period i.e. 01/04/2021 to 31/03/2022 and are in force for the full sum assured as on 31/03/2022. It would apply to policies resulting in claims by death or maturity (including those discounted within one year of maturity) or surrendered on or after 01/01/2022.

The interim bonus rates are applicable to policies in respect of each policy year entered upon after 31/03/2022 and result into claims by death or maturity (including those discounted within one year of maturity) or are surrendered during the period commencing from 01/01/2022 and ending 9 months from the date of next valuation.

The LIC Bonus Rates – 2022 – 2023 for new plans are as below.

The below bonus rates are for the old plans.

## LIC Final Additional Bonus Rates – 2022- 2023

As explained above, Final Addition Bonus (FAB) is a one-time additional bonus paid along with the final payment of the policy. The minimum term required for the eligibility of the Final Additional Bonus as per the current valuation is 15 years also, FAB rates increase with the increase in the sum assured of the policy.

These Final (Additional) Bonuses are applicable In the case of Plans of Groups 1, 2, 8, 9, and 10 mentioned below.

- (Group 1) Whole Life type (Plans 2, 5, 6, 8, 10, 28 (Before Conversion), 35, 36, 37, 38, 49,77,78, 85 & 86)
- (Group 2) Endowment type (Plans 14, 17, 27 (After Conversion), 28 (After Conversion), 34, 39 40, 41, 42, 50, 54, 79, 80, 81, 84, 87, 90, 91, 92, 95, 101, 102, 103, 109, 110 & 121)
- (Group 8) Jeevan Mitra (Double Cover plan), Jeevan Saathi (Plans 88 & 89)
- (Group 9) Jeevan Mitra (Triple Cover Plan: Plan 133 )
- (Group 10) Limited Payment Endowment (Plan 48)

Let us now see the FAB rates for special plans where the FAB is different from the above rates.

## LIC’s Jeevan Saral – Loyalty addition rates 2022 – 2023

LIC Jeevan Saral plan was one among the popular many where many investors invested. Hence, let me share the LA rates of this plan. Note – Please read the below chart as “**Monthly Premium Band**” but not as “**Annual Premium Band**“.

## LIC Bonus Rates – 2022- 2023 – Is it really add value?

Look at the current and past bonus rates of LIC. They are not increasing drastically. In fact, for many policies, the bonus rate is the same for many years. Obviously because of this and no additional return on such a declared bonus will erode your return part. Let me share with you one of my client’s real experiences and this seems to be the classic example of how low-yielding such policies will result in a difficult time for you in the future. I am not pointing out LIC alone here. It is the case with all insurer’s products where if you invest in a such endowment or money-back kind of products.

Think and act wisely rather than just running behind someone’s recommendation. If you still feel such 5% or 6% returns are fantastic for your long-term wealth creation, then please go ahead and buy these products. Otherwise, you have to think seriously.

To give you more clarity on how this bonus in a traditional plan works and erodes your wealth, let me take an example. Assume that you took a traditional plan of Rs.5 lakh Sum Assured and the term is 20 years. Let us assume that the bonus rate for this plan is Rs.50 per Rs.1,000 Sum Assured. Hence, each year the insurance company will declare a bonus for your policy of Rs.25,000 (Rs.50*Rs.5,00,000/Rs.1,000). As this declared bonus will not participate in any future growth its value will depreciate with each passing year. If we assume a 6% inflation rate, then the first year’s bonus of Rs.25,000 will be worth just Rs.7,715 after the 20th year. Because it is not earning anything, its value depreciates by each year. If we consider the depreciation of such each year’s bonus, then the same can be graphed as below.

At the policy tenure end, you feel that the insurance company giving you Rs.5,00,000 as a bonus (Rs.25,000*20). However, due to inflation of around 6% and its zero return on each year’s such bonus, it will be just around Rs.2,95,782 (sum of each year’s final value on the 20th-year post 6% depreciation). The final difference between the total bonus to the depreciation value due to inflation is a whopping of around 40%. Due to low yielding nature, such products are not suitable for your long-term wealth creation.

Hence, whether it is LIC or some other insurer, never combine your insurance with investment and think of real returns than the plain return numbers.

## 20 Responses

I have taken Jeevan Saral in 2013. Policy term is 15 years. Sum Insured is 500000 and Maturity benifit is 384000. Premium is 24020.

Jus wanted to know if there will be any lotalty addition on maturity benefit. If yes what can be the appx amount?

Dear Zaheer,

Check the above post properly.

Thank you for the explanation, examples and irr calculation template. I have below comments

1. There will be some tax benefit of paying premium under 80c. So that will need to be considered in irr calculation.

2 for money back policies, the amount received in between can be re invested, so that also to be considered for irr calculation.

3 returns from some of these policies are tax exempt so that should also be commented on when irr is being calculated.

Regards

Dear Chandramoulee,

1) This is how they try to increase the IRR. However, filling the Sec.80C benefit in many cases is very simple without this product.

2) Where you re-invest matters a lot.

3) Accept. However, even if you consider that part also, the returns are not even can beat the typical PPF returns.

Jeevan samuradhi plan 156

Sum assured -200000

Premium 8441/- half yearly 20 years

Guranted addition 65 per thousand

So i want to know rate of loyalty addtion of 20 years and maturity amount

Dear Nikhil,

Wait for complete sharing from LIC website.

Dear Basu ji, Can you pl advice me about Jeevan Tarang.. policy in the name of my minor son.. policy commenced in Oct 2007 and ends in Oct 2028. I would hv paid a premium of 4.82Lacs in total till 2027 for a coverage of Rs.5Lacs. Will it make sense if I exit now?

Dear Dinesh,

I have replied to your email.

The bonus for 2022-23 has still not been added. When I checked the bonus information, it still shows the amout that it showed me when I checked in April 2022.

Dear Chetan,

They will add it soon. No worries.

Drear sir..Can you post..All insurance companies bonus rates for 2022-23..Thanks in advance.

Dear Veeraprasad,

It is cumbersome to do so.

Dear Basu Sir,

I just checked out of curiosity. Private insurers bonus rates are also really HORRIBLE.

regards

Dear Rajesh,

That’s what I am trying to say since beginning.

Dear Basavaraj Ji,

Really appreciate the above information shared by you every year and I eagerly await it during the month of October. Just seek one clarification for Jeevan Saral – In the above chart for Loyalty Addition for Jeevan Saral – it is mentioned as “Annual Premium Band” unlike “Monthly premium band” in previous bonus posts.

Can you kindly confirm if this is a typo?

Best Regards,

Sachin

Dear Sachinkumar,

My bad…it is a monthly premium band.

Sir I purchased the Jeevan Anand policy in 2018 at age 34. Policy term is 35 years. Kindly advise what can I do.

Dear Akshayy,

If you are fine with 5% to 6% returns for 35 years, then continue. Else, better to stop the premium payment. Let the policy be converted into paid up.

Hi Basavaraj,

Thank you for posting the LIC bonus for FY 2022 – 2023.

Just want to highlight two things –

1) Under “Withdrawn Policy”, Jeevan Pramukh is missing.

2) Final Additional Bonus for”Jeevan Anand ” is missing for term 23 years. If you refer last year’s bonus it was the same 22 years. So, this year it should be for 23 years.

Would be great if you can help with theses details.

Thanks and Regards,

Joyraj Das Gupta.

Dear Joyraj,

I just highlighted the major policies but not all policies. For Jeevan Pramukh, the bonus rates are 45,46,49 and 53 for 10, 15, 20 and 20 years respectively.

For Jeevan Anand, 23 years FAB information is not available with me. Once I get, then I will update the same.