How LIC Bonus Works. Complete Guide to Reversionary Bonus

What is LIC Bonus?

Every year, LIC invests the premiums collected from crores of policyholders in government securities, corporate bonds, stocks, and real estate. When these investments generate profits, LIC shares a portion with policyholders as 'bonus.'

This bonus is added to your sum assured. So if your SA is ₹10 lakh and LIC declares a bonus of ₹48 per ₹1,000, you get ₹48,000 added to your policy that year. This accumulates every year until maturity.

Types of LIC Bonus

• •Simple Reversionary Bonus: Declared annually as ₹X per ₹1,000 of SA. This is the main bonus. Once declared, it becomes a 'vested' right. LIC can't take it back.
• •Final Additional Bonus (FAB): One-time bonus at maturity for policies that have been in force for a long time (typically 15+ years). Like a 'loyalty reward.'
• •Interim Bonus: If your policy matures or a claim arises between two bonus declarations, LIC pays a proportionate interim bonus for the period.
• •Guaranteed Addition: Some newer plans (Dhan Sanchay, Bima Jyoti) have guaranteed additions instead of reversionary bonus. you know the exact amount from day one.

How Bonus is Calculated. Example

Policy: New Jeevan Anand, Sum Assured: ₹10,00,000, Term: 20 years, Bonus Rate: ₹48 per ₹1,000 SA.

Year 1 bonus: ₹10,00,000 / 1,000 × ₹48 = ₹48,000. Year 2 bonus: Same = ₹48,000. (Note: Simple reversionary bonus is calculated on original SA, not accumulated amount.)

Total bonus over 20 years: ₹48,000 × 20 = ₹9,60,000. Plus FAB at maturity: ~₹1,00,000-2,00,000. Total maturity: ₹10,00,000 (SA) + ₹9,60,000 (bonus) + ₹1,50,000 (FAB) = ₹21,10,000.

Your total premium paid over 20 years might be ~₹9,00,000-10,00,000. So you get roughly 2x what you paid, plus you had life cover the entire time.

When is Bonus Declared?

LIC declares bonuses once a year, usually after the annual valuation of its assets and liabilities (around March-April). The bonus rate for each plan is published on LIC's website and communicated through agents.

Important: Bonus is NOT guaranteed. LIC declares it based on profits. However, LIC has declared bonus EVERY year for decades without exception. The rates vary slightly, but they've never been zero.

Bonus vs Guaranteed Returns

Some people prefer newer plans with 'guaranteed additions' (like Dhan Sanchay) because you know exactly what you'll get. no uncertainty. Others prefer traditional bonus plans (like Jeevan Anand) because LIC's bonus rates have historically been very competitive.

If you want certainty: Choose guaranteed addition plans. If you trust LIC's track record and want potentially higher returns: Choose bonus-participating plans.