Latest LIC Bonus Rates 2017 – 2018 | Bonus Rates Chart of old & new LIC plans

LIC bonus rates for the year 2017-18 have been recently announced by the Life Insurance Corporation of India. These latest LIC bonus rates 2017- – 2018 are applicable for the valuation period from 1st April, 2016 to 31st March, 2017.

The Investment Returns on traditional life insurance policies like Money-back or Endowment are mostly dependent on the bonus rates declared by LIC. So, it is very important to track the Bonus rates of the LIC Policies that you have bought (if any).

All insurance plans of LICwith the suffix ‘With Profits‘ are eligible for allocation of annual reversionary bonuses. When the bonuses are allocated they become vested with the policy and are payable on maturity or on death of the assured during the term of the policy.

These new bonus rates are applicable on policies which are in-force as on 31-03-2017 and also applicable to all LIC policies where death claims or maturity claims have to be paid (or) surrendered on or after 1st January, 2018.

The rate of bonus allocated on your LIC policy depends upon:

  1. The Plan and Term of the policy.
  2. LIC’s Investment experience and the surpluses generated during the year.
  3. Bonus declared is always based on Sum assured and not on the premium amount.

Latest LIC Bonus Rates 2017 – 2018

The bonus rates of almost all LIC plans have been kept unchanged. Below are the bonus rates of the old LIC plans ;Latest LIC Bonus Rates 2017 - 2018 Old LIC plans bonus rates chart list table

LIC’s Bonus Rates list for New LIC plans 2015-17

Below are the new bonus rates for the newly launched LIC plans (plans that were launched during 2015-17) ;

LIC new plans bonus rates chart list table 2017 - 2018 FY LIC jeevan pragati labh tarun lakshya New money back LIC loyalty addition final additional bonus

Below are the latest LIC Bonus rates for the plans which are open for sale, but launched before 2015 ;Bonus rates of LIC New plans new Jeevan Anand Jeevan Nidhi Endowment Single premium endowment plan 2017 2018

How to read the above tables? How to calculate the bonus amount on my LIC policy?

In the above table, on “New Jeevan Anand” 15 years plan – LIC has declared Rs 41 per Rs 1000 Sum Assured. If you had bought a similar plan for a Sum Assured of Rs 5,00,000 then the bonus amount on your policy would be Rs 20,500 ((SA/1000)*41). Like this, every year LIC declares bonus rates. But, the rates can vary. Remember, these bonus amounts are not paid to you immediately. They are accrued and paid on maturity or claim.

If you observe that the minimum bonus amount per Rs 1000 sum assured on new plans is Rs 37 and the maximum being Rs 51. The returns are pretty low. It is better to avoid investing in these kind of low-yielding Traditional plans (of any life insurance company’s) for long-term.

Why Traditional Life Insurance Plan can be a bad Investment?

  • High Cost of Insurance & Low Life cover : The premium rates on Traditional plans are much higher than the term insurance plans. If you are buying an Endowment plan or money-back policy for life cover then kindly note that you are paying a very high premium for a low life cover.
  • Low Investment Returns :
    • The conventional plans can be of two types – i) Participating Insurance plans & ii) Non-participating insurance plans.
    • In case of Participating plans, the investment returns are primarily dependent on the bonuses declared over the Policy term by the life insurance company.
    • In case of Non-participating traditional plans, the death and maturity benefits are clearly mentioned upfront. That means a policyholder knows what he/she is going to get at maturity or on death.
    • In both the cases, most of the traditional life insurance plans offer investment returns of around 3 to 6%.
    • So, in terms of life cover you pay high premium & you get low life cover and at the same time in terms of Returns too, you get a meager return on maturity.
  • Percentage of Returns are not guaranteed : The plans which fall under the category of ‘Participating plans’ the percentage of returns are not guaranteed. The rate of bonuses declared by a life insurance company can vary from year to year. The product brochures clearly state that the rate of return is for illustration purposes only. So, kindly be aware of this point.
  • Terms & Conditions on Bonuses : Bonuses like Loyalty addition or Final additional bonus may or may not be applicable on all traditional plans. They can be applicable based on the quantum of sum assured and/or policy term.
  • No Compounding effect : The bonus (simple reversionary bonus) declared by most of the Endowment plans or Money-back plans doesn’t compound itself. For example, let’s say your life insurance company declares bonus of Rs 40 per 1000 of sum assured for two consecutive years. If you have invested in an Endowment plan of sum assured Rs 1 Lakh, after 2 policy years you will receive a bonus of Rs 8,000 (Rs 4,000 + Rs 4,000). This Rs 8,000 would remain as Rs 8,000 till the maturity of the endowment policy. It is just accrued and compounding does not come into the picture.
  • High Penalty : If you decide to surrender a traditional life insurance plan in the initial years, you will end up paying a hefty penalty. You can surrender the policy for cash only after the premiums have been paid for at least three policy years. (Read : ‘When your tax benefits can be cancelled & revoked?‘)
  • Tax saving is an additional benefit :Insurance is primarily for Protection and not for saving Taxes. Kindly note that Tax saving is an additional benefit, that’s it!
  • Erosion of wealth – Life insurance policies are long-term contracts. When you are investing for long-term, would you like to get decent inflation adjusted returns or not?Your endowment or money-back plans are low-yielding investments. these may give you negative inflation adjusted returns.

Kindly go through below related articles;

Besides Simple Reversionary Bonus, LIC also declares other types of bonuses like;

  • Final Additional Bonus (FAB) : It’s paid to those policies which are of a longer duration and has run for say more than 15 years. This is a one-time payment.
  • Loyalty Additions : These are similar to FAB.
  • Guaranteed Additions : The Guaranteed Additions are payable along with the Basic Sum Assured at the time of claim.

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post published on 24-August-2017)

(I will soon try to provide details on LIC Loyalty Addition rates 2017-18 & Final Additional Bonus rates for 2017-18. The above details are based on limited available information and can be modified.)

  • Swami says:

    I have not received any bonus this year (both financial / calendar). Has LIC declared bonus or not?

  • Aniket Kulkarni says:

    Hi Sreekanth,

    I was looking to buy plan 832 (New Children’s Money Back) of LIC. I got some data on the Simple Revisionary Bonus for this plan (Rs48 per Rs 1000 of Sum Assured). Can you suggest what we can expect as Final Additional Bonus for this plan?

    Regards,
    Aniket

  • Deepika says:

    My policy is matured on 28th March 2018 but they didn’t not transferred that matured amount in my Bank account. I visited in branch they said that rules are changed from 1st April 2018 you have to submit ur bank account detail ( my bank details are already deposited from very first day) plus original certificate then only we will release ur cheque, transfer is not allowed now, So please suggest what can I do with this?

    • Dear Deepika,
      You need to submit NEFT mandate form to LIC, also enclose LIC policy bond (original), Copy of any ID/Address proof and cancelled bank cheque leaf (which has your name imprinted on it).

  • DADHI GAM says:

    Sir ..
    i deposit in 3 month only 603 rupees.
    can you calculate my maximum rates and bonus in 19 years.

  • Pradeep says:

    Hi Sreekanth,
    Didn’t they announce that this year’s bonuses will be 40% more due to great profits made in the last year?
    Have they cheated everyone on that promise as well?
    LIC stands for Lies insincere and cheat

    • Dear Pradeep..Last year they had declared Special bonus on the occasion of Diamond jubilee year, this year, I dont think they have declared any higher bonus (even I have read the news quoting the possibility of higher bonus this year…).

      • Pradeep says:

        Sreekanth,
        Is it not a complete breach of trust with what they did?
        I mean have they not cheated the customers so blatantly?
        Just asking.

        • Dear Pradeep,
          Of-course, its breach of trust..
          Majority of the insurance agents (all companies) do not explain even the features of a plan to their prospects…forget about LIC keep up with their promise(s)..
          Yesterday, I got an email query from one of my blog readers (Sr.Citizen), an insurance agent cum MF advisor, he approached the agent for MF, and he is trying to sell him an Endowment policy..Luckily he emailed me to cross-check this…

          • Pradeep says:

            Hi Sreekanth,
            We all know LIC agents put only their interests in selling these plans and mostly all the selling happens in a private place. Its highly condemnble how they cheat.
            But their employer made a public headline grabbing statement which was flashed in all news sites and papers after making huge profits in both stocks and bonds in the last fiscal year. They paid plenty of dividend to the govt as well.
            And then they make a complete U-turn when they announce the bonus and no one to question them.
            Did Arun Jaitley kill the idea of more bonus payment? He has played games with EPF, fuel prices, service taxes and all things that were to benefit people. I seriously suspect his involvement.

          • D SHANKER says:

            Half baked knowledge can be harmful, it’s govt which decides extra bonuses and anything special profits to customers, customer awareness can be an aspect but we choose agents
            As per our choice so holding company responsible for agents works is highly arbitrary. Illumination required.

          • Dear SHANKER,
            Thank you for sharing your views!
            Kindly elaborate this – “it’s govt which decides extra bonuses and anything special profits to customers”?

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