Many of us trapped in typical endowment life insurance plan. But finding it hard to calculate LIC policies maturity amount on our own. Let us simplify this.

Long back, I wrote a post “LIC Policies-How to calculate returns?“. In that post, I explained about the meaning of bonus, Guaranteed Addition, Loyalty Addition and Final Additional Bonus. I also explained about how to consider and calculate each part.

But I felt that many readers not able to understand how to arrive at return % from this investment (sorry to say so as an investment for insurance product). Hence, thought to write purely on how to calculate the return from your typical traditional life insurance products.

Here I am using the Excel tool to calculate the returns. The function what I will use is IRR (Internal Rate of Return).

**What is IRR (Internal Rate of Return)?**

I will not use those confusing financial words. Instead, you can say that it is the excel sheet function used to calculate the return on your investment when you make some investments in periodic ways. For example, you pay an insurance premium regularly (either yearly, half-yearly, quarterly or monthly) and at the end, you receive the amount from an insurance company.

**How to calculate IRR using excel sheet?**

I created a video of how to calculate IRR using excel sheet. In this video, I took all probable types of all endowment plans. I took the examples of the regular premium endowment plan, limited premium endowment plan, single premium endowment plan and money back plans.

You notice in this video that even though I considered higher bonus rate i.e. Rs.50 per Rs.1, 000 Sum Assured per year, still the return of such products not crossed 7.5%.

It is too simple to calculate the return on your own. If you already bought the endowment products, then look at last year bonus rate for your policy and can consider the same bonus rate and final additional rates to arrive at final maturity value or return.

However, if you are planning to buy a new product, then don’t rely on the life insurance agent’s claim. Instead, cross check the bonus of that particular product and then using the above video, you can calculate the expected return from your investment.

If there is no historical bonus rates for your plan (this happens when the plan is new), then in my view, it is wise to consider the bonus rate of Rs.50 per Rs.1, 000 sum assured per year.

Remember that your agent may alter the bonus rates (at the higher end) and may show you the return, which may force you to invest in such products. But never rely on agent’s claim. Instead, visit LIC portal or my earlier post on bonus rates “LIC’s Bonus rates for 2015-16 and Comparison” and do the calculation on your own.

Buy such products only, if you fully convinced about the life insurance offered and returns in such products. Blindly investing for the sake of tax saving, forced selling by agents or simply considering such products as best may actually harm you in the long run.

I am also sharing the excel sheet which I used in this video tutorial for your reference. Let me know if you still feel difficulty in the calculation.

Hope this post will answer to many of those endowment plan buyers or already bought individuals concerns of calculate LIC policies maturity amount.

## 67 Responses

Dear Mr Tonagatti,Thanks a lot for helping us to take decision.But Sir before helping others You should know first.I think You have not gone through LIC Products and features properly.I watch your IRR calculation of Money back policy where you enter the Premium for continuous 20 Yrs which is Actually 15 Yrs PPT..However Thanks for helping us.

Dear Rafique,

I am not following the product which you may be thinking of (limited premium payment). For generic understanding, I took the illustration.

Jeevan Shri (Plan 112)

SA-Rs.5,00,000

Premium payment term-16 years

Policy maturity period-25 years

I already paid 16 years of premium on time which ended in 2017, will there be final additional bonus to this policy with the maturity amount at the end of 25th year. I’m out of the country currently and I couldn’t find details about this policy as its discontinued. This was sold to my parents who paid the premium for first two years. Can you plz help me by explaining the maturity amount? Some say FAB will be added to maturity and some say the final amount will not have FAB.

Thank you!

Dear Lakshmi,

This plan does not offer any FAB. If you have doubt, then check THIS LINK OF LIC for the same. Also, FAB is not a huge differentiating factor in such policies. It hardly changes your returns.

Hello Sir

I have two LIC Policies as Jeevan Anand (Plan-49) and yearly premium is Rs. 13026 for both and I had already paid it for 10 years. but Premium paying term for both is 21 years, So how much I will get If I surrender it now. LIC customer portal showing vested bonus for both policies as 1,09250. So can you please tell if I will get the at least amount which I paid.

Monika-Contact the LIC Branch to enquire the same.

I have a Jeevan saral (165) Plan.

My Death Sum Assured =7.50.000/-.

age at entry=21

policy term=25

yearly premium paid=36030/-

Could you please help me calculating the maturity value on 2037 at the time of maturity?

Shreyasi-Refer my post “LIC’s Jeevan Saral-Why so much confusion?“.

Hi,

I have seen your you tube video and read this article as well . Its really a great job you are doing. Congratulations !!!

I am really confused about three of my LIC policies. I don’t need the insurance coverage as I already have a term plan; I bought all these policies before I bought the term plan. So now I am confused about which is a financially savvy solution among these three :

(1) Continue and take the maturity amount at maturity

(2) Discontinue the premiums and take the paid-up amount at maturity

(3) Surrender and take the surrender value and invest in good MF

The details of my three policies are :

(1) Jeevan Chaya(103) Bought in 2002 Premium 24393 Sum Assured 4lakhs Policy term 18 years Premiums paid 15

(2)Jeevan Chaya(103) Bought in 2003 Premium 24568 Sum Assured 4lakhs Policy term 18 years Premiums paid 15

(3) Jeevan Anand(149) Bought in 2004 Premium 28156 Sum Assured 5lakhs Policy term 20 years Premiums paid 13

As I said, the only reason of my investments is financial returns which I get (i am covered thru term plan). Since one of my kid is in college and other would be in college in another 1.5 years, I really need good money.

Thanks in advance for your help.

Vinita-As the all three plans about to mature, I suggest you to turn the policies to paid up than surrender.

Thanks a lot for such a prompt resply.

Even I was thinking that (barring Jeevan Anand , because I still need to wait for 7 years – but you suggest that I shouldn’t surrender that as well, right ?).

However my confusion started when i visited LIC office yesterday and the lady there suggested that instead of paid-up , I should rather surrender my policies. So I am wondering, is it beneficial for LIC that the policies are surrendered rather than paid-up ? Thats why she suggested that ?

Thanks again for helping me with this decision – really appreciate a lot.

Vinita-The concerned Official might have suggested you with intention of selling one more NEW policy from the surrender amount (the usual tactic they follow) 🙂

Hi Sir

I am confused with the investment or the policy which I have taken in JAN 2017 with some wrong guidance or cheating from agent

He told it will increase I will get very good amount at maturity, its purely my falut and was going through your blogs which is very well explained

Below is my policy which is not the one which I asked the agent

HDFC Sampoorn Samridhi Plus

Sum Assured: INR 13,30,000

The policy paying term is 16 years and maturity is 21 years

I am paying 9406 ( 9000 premium + 406 tax) per month , paid for one year

Could you please suggest me if I should allow this lapse as I see if I calculate I will be getting very less

the maturity benefits are

SA

Guarnteed additions of 5% per SA for first 5 years

Reversionary bonus –

so Should I allow it to lapse or make it paid up polciy

Please help

BR

Venkat

Venkat-To be eligible for surrender or paid up, the policy must be continued at least for 3 years. Hence, take your call based on your loss consuming capacity.

Thank you sir for quick response

I mean my question is as the policy is only one year old , is it better to lapse or make it paid up or pay for whole term

I mean is it better to invest the rest of 15 years policy somewhere else , any guess how much will be maturity for this kind of policy

as I see the gura

SA 1330000

GA 265780

Reversionary bonus 1255814 ( assuming 4.5 % for 21 years ) and

the total of above all three is 2851594 ( roundign to 29 lakhs ) – in year 2038

I assume they may give some terminal bonus but I doubt after reading different blogs

so is it worth continue or lapse it and use the rest 15 years policy payment in some good investment

sorry for asking the detailed question , as I was in need of some advise on this so I have asked

BR

Venkat

Venkat-It is a crap product sold to you. Hence, in my view better to come out at the earliest.

Thank you Basavaraj for your reply

I was also thinking to come out i.e. to lapse and invest the same in good MFs ]

Luckily I paid only one year out of 16 years total payment years and lucky to see your blogs on financial knowledge

your blog is really helping many people .

BR

Venkat

Sir, what will happen if FAB is not declared on policy`s maturity year?

Dhana-YOU CAN”T QUESTION and accept it of whatever they give. Because they clearly mention that IF DECLARED.

Jeevan Surabhi table 107, term 20, premium fully paid sum assured 50000, date of maturity Feb 2018,what is maturity amount

Tarun-Refer above post and calculate.

New endowment plan

Sum assured-1000000

Term-17yr

Maturity- after completing ppterm

What will bi the expected maturity amount

Dibesh-Please refer the video and you can calculate on your own.

Hi Basavaraj,

First of all thanks for this video after 10 years of paying premium today only learnt how to calculate returns for LIC policy.

Please clarify this, For example i paid the premium up to 10 years for 21 year term and leave it till maturity.

At the end of the maturity period will Bonus and Final Additional Bonus will be added for returns?

Sum assured will be reduced according to the number of premiums paid right? how to calculate the sum assured in this case?

Based on your video to calculate the IRR for my scenario do i need to fill in the premium in negative values upto 10 years only and make the remaining years zero?

Which is best surrender or leave it till maturity or continue paying premium? As per the IRR calculated with highest bonus i am getting 6.75% returns for my policies. Kindly advise.

Thank you.

Keynes-Once you stop the premium, then the policy will turn to be paid up with reduced sum assured. The policy will not earn any further bonus (from the date it turn to paid up policy). But it will be payable at maturity or death of life assured (during policy period). Hence, take a decision based on the difference between surrender and paid up value and also the remaining period left.

“Based on your video to calculate the IRR for my scenario do i need to fill in the premium in negative values upto 10 years only and make the remaining years zero?”-YES.

Better to turn paid up as in your case you almost paid for the half of the policy period.

Thank you very much for your answers

Hello Basavaraj,

I am Amit, I had taken the Jeevan Saral (with profits) policy in the year December 2011 premium of 5104/- monthly this includes accident benefit premium.

Installment premium for main plan (Monthly) = 4999.84

Accident benefit premium = 104.16

MSA mention in the policy bond: 1616900

Date of maturity is: year 2035

Policy Term – 24

I have paid premium since last 5 years regularly now I need to surrender the policy because I don’t see so much returns on this policy. Please advice what will the surrender value for the same and also suggest if this recommended to continue with the policy or shall divert this money into ELSS or some good mutual funds as my end goal is to create a good wealth for my retirements.

Please response as early as possible as next premium due on 15th of every month.

Regards

Amit

Amit-Check with LIC branch for surrender values.

Hello Basavaraj,

Nice tutorial explaining how to calculate the maturity.

Can you please help to provide similar examples for Jeevan Saral, Jeevan Shree, Jeevan Anand and Jeevan Suraksha plans as well?

Ananth-The basic ideas is same. There is no such difference. Let me know what difficulty you face in that case.

Hello Basavaraj Tonagatti,

Jeevan Saral has having Guaranteed Maturity Return, So how I can calculate Bonus Calculation, Final Additional Bonus Calculation.

For Yearly Premium of 4804 for 25 Years I get Maturity Sum Assured according to agent is 546040.

I am confused Now, May be agent is wrong or this sheet to calculate Final Amount.

Please give us clear idea incase policy like Jeevan Saral (T. No 165).

Thanks,

Chinu-Whether the MSA is mentioned in policy bond? Never rely on these agents. They say so many things just to get the premium from you. Jeevan Saral offers MSA+LA. Check how he calculated MSA. Do some work because it is your money not your agent’s.

Thanks for suggestion, yes I feel cheated now! The Finance Planner like you is very much needed to community.

No under the policy bond, It is Sum Assured mentioned only!

But than also I am not finding LA or bonus under chart.So what are the LA for the Policy?

Thanks,

Chintu-First call to LIC customer care and find out the MSA. Based on that discuss the same with your agent. Then decide whether to continue or not. LA we can calculate later stage.

Hi Basu,

Nice work for all

I want to know about 817 table no plan how i can calculate maturity amount and same is bima gold.

Regards,

IJ$ingh

Indrajeet-You can calculate it using the same way as I explained in my video. Let me know if you have any doubts.

Nice work Basavaraj. Keep rocking.

I am a Bhima Gold LIC policy holder. It is 12 year plan of amount 10 lakhs. My yearly payment is 59,650. 8th year finished. Never delayed my payments. I got 15% from 4th and 8th year (as Money Back or Survival Benefit or something like that). How much will I get in the maturity period, ie, after 4 years including Loyalty Addition + Bonus + My Amount ?? Will you please calculate and help me to find out.

Thanks,

Kiran

Kiran-Please do the calculation using above video tutor.

Hi Basu,

Once again thanks for sharing this information.

I have a query,

I have LIC policy Jevan saral (Table-615), i am paying Rs. 48000 per year for SA of 10Lakh for the tenure of 20 year. It has been three year now since i have been enrolled with this policy. I later got the information from my friend and your blog post that agents are getting good commission year on year, i was not aware of that otherwise i would have taken the policy directly from the LIC. Now in your this post you have shown how the bonus is calculated. Now i have a query that the commission as my yearly bonus to agent is same as the bonus you are calculating in the provided video here in this post. If this is the case then i am in big loss and can you please help me with the solution in such a case.

regards,

Parbinder Rawat

Parbinder-Whether your concern is agent’s commission or your earning from the investment?

My concern is earning from the investment. I mean whether i will get less at maturity as my agent is getting commission or it will be same irrespective of direct purchase or purchase through agent.

In other words, how much will be my earning at maturity with agent or without agent(direct policy).

Parbinder-Do you feel there is only agent’s commission involved here? There are other expenses too, which you are not aware of. For traditional and ULIP plans, you have options to go with agent mode only. LIC offering online term plan and immediate annuity plan. Rest of all it’s plans are offline. So no option for you to go with an agent.

Ok, but as i already have this policy through agent from last three years, i am concerned whether i will receive the bonus at maturity which have calculated in the above video.

Parbinder-Whether you go direct or through agent, bonus will be same.

Thanks for your prompt response as always.

Thank you Mr. Basavaraj Tonagatti, for such a detail expalination about the Returns from LIC.

I have multiple LIC policies (as its Govt Co.), and nothing in Mutual Funds. And as discussed with friends all are influensed by MF. So, shall I discontinue LIC investment and start investing in Mutual Funds. Because returns from LIC is much lesser side than that MF.

Kindly advice.

Thanks,

S. Mayekar

Mayekar-Yes.

Mr.Tonagatti.

I’ve been watching the posts left on this blog by you and found those to be very detailed and helpful.Thanks a ton.

My only concern is how safe to go with Mutual Fund as I’m not familiar with process involved in it and what is the benefit and risk involved as well.

Most importantly which are best MFs available in market currently..

Debasish-Your questions are genuine. But answers are lengthy. Hence, I suggest you to google the questions. If you found any specific doubts, then we can discuss on them.

Hi

Thanks for uploading this video tutorial. It will (hopefully) educate prospective investors to let them know what rate of return they can expect from traditional LIC plans.

It is really sad to know that none of the plans beat long term inflation rate ( if assumed at 8%).

This has also raised questions in my mind.

First, we have assumed accrued bonus rate of 5% for 20 years based on historical data/ illustration. However, if RBI reduces interest rates to even lower levels in the next 20 years, (probability of it is very high) will LIC be able to sustain 5% return? Since it is never guaranteed portion & traditional plans invest around 85% of funds in Govt securities, bonds etc.

Second, if ULIP can beat long term inflation rate? Since now commission to agent has been reduced substantially.

Pls. suggest

Thanks

Ritesh-The sadest part is, each central governments use LIC as puppet to their disinvestment strategy. Don’t the future but it is bleak for sure.

Yes.

However, the question remains whether LIC can continue with 5% accrued bonus for next 20 years specially when interest rates are expected to nosedive. Even in the current scenario, investors are loosing big by investing in traditional products since return can’t beat long term inflation. However, people just don’t understand it or they are not being guided properly by agents. (Since high commission is attached with traditional plans) I haven’t seen any agent promoting term plans. They are interested in pushing traditional plans.

Eventually, people will understand how futile it is to invest in traditional insurance plans (from any insurance company including LIC) and will die its own natural death.

However, I expect ULIPs doing well going ahead since it has the potential to beat at least long term inflation rate if one stays invested for 15 years or more.

What is your take?

Thanks

Ritesh-I expect a downtrend in bonus rates. Also, I not say only MIS-SELLING, but many a times MIS-BUYING too. People not do their homework. They need readymade solutions.

MR BASUNIVESH YOU ARE SAYING MARKET GO DOWN LIC ALSO GO DOWNWAREDS MOST OF LIC FUNDS INVESTED IN GOVT SECTOR ONLY , LIC IS INSURANCE COMPANY MOST OF AGENTS SELL THEIR PRODUCTS AS INVESTMENT , MOST OF PRIVATE LIFE INSURANCE IN EARLY DAYS SAIL ULIP PLANS , THEY FAILED NOW THEY REALIASE THEY FOLLOW LIC FORMULA , TRIDIATIONAL INSURANCE, IN TRADIATIONAL INSURANCE I GURANTEE THAT LIS IS NUMBER 1 BECAUSE OF THEIR COMMITMENT IF ANY RISK IS HAPPEN MIDDLE OF TERM LIC PAY TOTAL INSURANCE VALUE, TELL ME WHICH IS THE BEST COMPANY ACCORDING TO SOLVENCE MARGIN ?

Sainath-I am neither for nor against private players. Whatever you industry people do. Today sell endowment tomorrow sell ULIP, who cares for you? The logic behind pushing for endowment nowadays from all insurance agents is reduced commission in ULIPs. Even LIC agents also saw the fiasco of Market Plus and Money Plus. Don’t say only private insurance agents suffered.

Traditional Insurance GUARANTEE? How much can and LIC product GUARANTEE me? Whether you give me a proof of such guarantee given by LIC to it’s policyholder? LIC is trusted company and private companies bankrupt right? Read my earlier post for better understanding and improve your knowledge about solvency ratio of other players too 🙂

For your information and data from IRDA shows that LIC is least solvency ratio compared to private insurer. Surprised? Check this below post.

What if your Insurance Company goes bankrupt?

U explain in video money back 20 yrs plan .in this plan premium paying term is 15yrs pls correct the video on money back plan.

Basant-Yes, you are right. But let it be like that. My intention is not to highlight a product, but to show how to calculate the returns from insurance plans.

Hi,

Nice vedio

But your real IRR is inclusive of Cost of life cover and Tax Benefits availed. If we reduce this cost from the premium the net yield increases. And I think that is best way to compare at par instrument without Insurance. Hope u will include in your next vedio.

Pradeep-LIC sell such products as combo of INSURANCE and INVESTMENT. Also, it is the cost that buyer pays. So I don’t think it is wise to exclude the mortality charges.

DEAR BASAVARAJ. THANK YOU SO MUCH FOR HIGH LIGHTING US HOW TO CALCULATE RETURNS FROM INSURANCE POLICIES. I AM PLANNING TO TAKE TERM INSURANCE COVER WITH ADD ONNS FOR 1.5cr kindly suggest which insurance company product i can rely upon . i am having in mind LIC HDFC AND ICICI. KINDLY MAIL ME YOUR REPLY. THANK U SO MUCH ONCE AGAIN

Praveen-Refer my earlier post “Top 5 Best Online Term Insurance Plans in India-2016“.

Thank you for eye-opener. I am glad that I have invested in LIC with return of nearly 7% with added insurance coverage plus income tax exemption under section 80C and Section 10 D(d). I hope this will enlighten many individuals who are taught by financial planner that endowment plan do not offer good return and are not suitable for investment. Considering the current bank rates and possibility of further bank cuts to around 3 to 4% in next 20 years, it makes sense to invest in LIC for both protection as well as saving.

Naresh-Great to know that you invested with LIC and very much satisfied with negative real return (7%). When we invest or calculate the return, it must be generic but not to consider 30% upfront tax saving tactic used by agents to sell such products. If we do so for products like PPF, then where such low yielding LIC products stand? For your information, when the interest rate cycle goes down or equity markets crash, then where LIC invests? Will they give from their own pocket? Obviously returns from such plans also come down. Don’t try to SELL your products saying LIC is the only product which is GUARANTEED on this earth.

Nice article and you brought a good point on how agents show returns on this which may vary in the long run but I have one input. Hope you will consider the same.

Sorry to say but the excel sheet you provided doesnt work.

I have had difficulty using it. I tired to put my yearly premium amount and other values but it didn’t calculated the maturity amount and other values. It will be really helpful if you can allow the same sheet to be downloaded.

Krishna-Thanks for your kind words. Can you elaborate more of what difficulty you faced? I try to rectify and upload it.

Hello. I am Sana. Currently doing job in one educational institute. Our management is cutting our 5% on salary to show to the government that we are in registration process. We were not registered since the beginning of this academic year 2015-2016, but now only few months are remaining and our school has told us to get benefit of PF and ESI saying us that it’s mandatory. But they found that our account is showing less amount as we just have started so they deducted our more 5% saying that it’s an ESI percentage. We asked them about 12% for PF 1.75% for ESI than why our 5% more has been deducted so they said because your account was showing less amount in ESI. Now what we teachers ask them what kind of prove we can ask for. Please reply.

Sana-I am not sure of ESI matters. If you doubt their motive, then complain with ESI for the same.