LIC Maturity Calculator

The LIC maturity formula

Every participating LIC policy matures at the sum of three things:

1. Basic Sum Assured, the figure on your policy document. Guaranteed.
2. Vested simple reversionary bonus, the declared rate per ₹1,000 × the number of policy years × the sum assured in thousands. Once declared, it cannot be taken away.
3. Final Additional Bonus, a one-time rate per ₹1,000 that depends only on the policy term, paid when the claim arises.

A ₹5,00,000 policy running 20 years at ₹45 per ₹1,000 accrues 45 × 20 × 500 = ₹4,50,000 of reversionary bonus. Add a Final Additional Bonus of ₹90 per ₹1,000, or ₹45,000, and the maturity value is ₹9,95,000, close to double the sum assured.

Close to double over twenty years is not a 100% return, and it is not measured against the sum assured anyway. It is measured against the premiums you paid, which is a different sum. Enter your annual premium in the calculator above and it works out what the whole thing earns as an annual rate.

Bonus rates by plan (believed to be 2023-24)

Final Additional Bonus by term

This is the single strongest argument for not surrendering a long policy near the end of its term: the FAB is forfeited entirely on surrender, and on a 30-year policy it can be worth more than five years of premiums. The surrender value calculator works out what a policy is actually worth if you stop early, which is a different and usually much smaller question than the one this page answers.

LIC return calculator: what your policy actually earns

A maturity amount on its own says very little. Roughly double the sum assured reads like a 100% return until you notice it took twenty years to get there, and it is measured against what you paid, which on most endowment plans comes to more than the sum assured by the end.

The figure that survives both objections is the internal rate of return: the one annual rate at which every premium, discounted from the year it was paid, adds up to what the policy pays back. It accounts for the term, it accounts for the premium you paid in year eighteen having worked for two years rather than twenty, and it is the same arithmetic behind a quoted deposit rate. That is what the calculator above gives when you add your premium.

Three things move that rate, and the declared bonus is only one of them. How long you pay for matters, because money handed over early has more years to earn: a plan taking premiums for twelve years out of twenty beats one taking them for all twenty, on the same maturity amount. What else the premium buys matters, because cover is not free, and a plan that keeps covering you after maturity funds that out of the same premium. The bonus basis matters, because LIC's reversionary bonus is simple rather than compound, so ₹45 per ₹1,000 a year is nothing like 4.5% compounding for twenty years.

What LIC plans return

Priced through this site's own engine at age 30, for ₹5,00,000 of sum assured over 20 years, the savings plans that run on that term land between 3.52% and 7.23% a year:

Single Premium Endowment Plan tops the table at 7.23% because the whole premium is paid once at the start instead of arriving a year at a time, and it earns bonus on the full sum assured from the first year. Among the plans you pay into annually, Jeevan Lakshya leads at 5.71%, taking premiums for 17 of the 20 years. New Bima Jyoti sits at the bottom on 3.52% because its whole maturity amount is written into the contract rather than projected from a bonus that can change, and that certainty is paid for in the return.

None of these rates is fixed, and they are not all fixed in the same way. On a participating plan the sum assured is guaranteed and everything above it is bonus, declared each year out of LIC's valuation surplus and revisable in either direction. On a non-participating plan the whole maturity amount is written into the policy, so the rate is the rate. Use the premium calculator to run the same comparison at your own age, term and sum assured.

The same premiums at a flat rate

The other way round is to ask what the same money would have come to somewhere else. Paying ₹28,973 a year for 17 years and leaving it to grow to the end of year 20:

Against ₹9,95,000 from the policy, plus death cover throughout the term, which none of those rows includes. No outside rate is printed here on purpose: PPF, small savings and bank deposit rates are set elsewhere, revised on their own schedule and different for every reader, so bring the one you can actually get and read across.

What the return does not count

Survival benefits on a money back policy. The calculator prices premiums against the maturity amount only, so on a money back plan it leaves out the instalments paid during the term and understates the rate. That plan's own calculator schedules each one in the year it falls; open it from the table above.

The Section 80C deduction (Section 123 of the Income-tax Act, 2025). Premiums on a qualifying policy may have reduced your tax in the years you paid them, which is a real part of the return and is not in this figure.

Anything paid on death. This is the return on a policy that runs its full term and matures. If it does not, the death benefit is a different and much larger number against the same premiums, and that is the part of a life policy no rate of return describes well.

What happens if you stop paying before maturity

A policy with at least one full year's premium paid (two or three on a policy sold before October 2024) does not have to be surrendered for cash if you stop paying. It can instead be made paid up: the sum assured is reduced to the fraction of the premium paying term you actually completed, and the policy runs on to the original maturity date at that lower figure, with cover reduced to match.

On a policy sold with a 20-year premium paying term, paying for 12 years before stopping leaves a paid-up sum assured of 12⁄20, or 60%, of the original. Whatever bonus had vested by year 12 stays vested and is paid at maturity; no further bonus accrues once the premiums do not. The Final Additional Bonus is lost, because FAB is paid only when the full term is honoured.

A paid-up policy keeps the sum assured working at no further cost, where surrendering trades it for a lump sum today. The surrender value calculator puts figures on that trade for a specific policy, and the blog post on surrendering explains when each option makes sense.

Tax on the LIC maturity amount

The maturity amount is exempt from tax under Section 10(10D) of the Income-tax Act, 1961 (Schedule II of the Income-tax Act, 2025), but the exemption has conditions attached to the premium, not to the maturity amount itself. It holds where the annual premium in every year of the policy stayed inside 10% of the sum assured (the threshold was 20% for policies issued before 1 April 2012), and for a policy issued on or after 1 April 2023, where the premiums on all such policies you hold together stayed inside ₹5 lakh in a year.

A ₹5,00,000 sum assured with a ₹45,000 annual premium sits at 9% and clears the test. The same sum assured on a limited-premium plan that charges ₹65,000 a year sits at 13% and does not, in which case the maturity proceeds become taxable as income in the year received. Check your own premium against your own sum assured rather than assume the exemption applies; the premium calculator shows what a given plan charges if you need the figure to check it against.

Where the exemption holds, the maturity amount arrives whole, so the return worked out above is already a post-tax rate. A bank deposit's interest is added to your income and taxed at your slab, so comparing the two fairly means grossing the policy's rate up. Jeevan Lakshya's 5.71% on the reference case above is worth this much in pre-tax deposit terms:

Surcharge and cess are left out, which understates the gross-up a little. This is the statutory mechanism, not advice about your position. Death benefits are exempt regardless of the premium ratio.