How LIC Premium Is Calculated: The Formula, Rebates and a Worked Example

LIC calculates your premium from a fixed rate for every ₹1,000 of sum assured, picked from the plan’s premium table for your age and policy term. It then takes off a rebate for large covers and for yearly payment, and adds any rider premium. This guide walks through each step with numbers from our own calculators, so you can check any quote yourself.

The LIC premium formula in one line

For most traditional LIC plans (endowment, money back, whole life), the calculation looks like this:

Yearly premium = Tabular rate × (Sum assured ÷ 1,000) − High sum assured rebate − Mode rebate + Rider premium

Each part is explained below. Term plans follow the same idea, but their rates also depend on gender and smoking status, and the rebate is usually built into sum assured bands.

Note: we are an independent site, not LIC. Our calculators follow published plan rules and source rate tables, so treat every figure here as a close estimate. LIC’s own illustration or policy document is final.

Step 1: Tabular premium per ₹1,000 sum assured

Every LIC plan has a premium table. For each entry age and policy term, it lists the yearly premium for ₹1,000 of basic sum assured. This is called the tabular premium. Actuaries build it from three things:

• Mortality: the chance of a claim at your age. It rises steadily as you get older.
• Interest: what LIC expects to earn on your money over the term.
• Expenses and benefits: agent commission, admin costs and, in with-profit plans, the cost of the guaranteed benefits and bonus.

LIC does not publish the full table, but each brochure prints sample premiums. The official Jeevan Labh 736 brochure gives ₹11,701 a year for ₹2 lakh at age 30 on a 21-year term, in yearly mode. That figure already has the 2% yearly mode rebate taken off, so the tabular rate is 11,701 ÷ 200 ÷ 0.98 ≈ ₹59.70 per ₹1,000. Our Jeevan Labh 736 calculator is built this way and reproduces every sample in the brochure. For ₹10 lakh sum assured the tabular premium is 59.70 × 1,000 ≈ ₹59,699 a year, before any rebate.

Step 2: How age, term and sum assured change the premium

Age

The older you are at entry, the higher the rate. Here is the yearly premium for Jeevan Labh 736 with ₹10 lakh sum assured and a 21-year term, from our calculator:

Age at entry	Yearly premium	Increase vs age 25
25	₹55,310	—
30	₹55,505	+0.4%
35	₹56,388	+1.9%
40	₹57,270	+3.5%

In a savings plan like this the rise is gentle, because most of the premium goes towards the maturity benefit rather than the cost of cover. In a term plan, age matters far more. LIC generally uses age nearest birthday. At 30 years and 7 months you are treated as 31, so buying a little earlier can matter.

Policy term and premium paying term

A longer term spreads the cost over more years, so each instalment is smaller. For a 30-year-old with ₹10 lakh cover in Jeevan Labh 736:

Policy term	Premium paying term	Yearly premium	Total premiums
16 years	10 years	₹85,835	₹8,58,350
21 years	15 years	₹55,505	₹8,32,575
25 years	16 years	₹47,125	₹7,54,000

The shortest option has the highest yearly premium but ends payments soonest. Look at both the instalment and the total before you pick.

Sum assured

The premium moves roughly in line with the sum assured: double the cover, roughly double the premium. It is not exactly proportional because of the rebate in the next step.

Step 3: High sum assured rebate

LIC rewards bigger policies with a lower rate, because its fixed cost per policy is spread over more cover. The rebate is either a cut in the rate per ₹1,000 or a percentage off the tabular premium. The slabs are different for every plan and are listed in its sales brochure.

Jeevan Labh 736 uses a cut in the rate: its brochure takes ₹2 per ₹1,000 of sum assured off from ₹5 lakh, ₹3 from ₹10 lakh and ₹3.50 from ₹15 lakh. Our calculator applies these slabs:

Sum assured	Rebate per ₹1,000 sum assured	Yearly premium (age 30, 21 years)	Premium per ₹1 lakh
₹4 lakh	None	₹23,402	₹5,851
₹5 lakh	₹2	₹28,253	₹5,651
₹10 lakh	₹3	₹55,505	₹5,551
₹15 lakh	₹3.50	₹82,508	₹5,501

The slab can even make more cover cost less: ₹4.9 lakh costs ₹28,667 a year, but ₹5 lakh only ₹28,253.

Term plans show the effect more sharply. In our New Tech Term 954 calculator, a 30-year-old male non-smoker pays about ₹6,803 a year for ₹50 lakh cover over 30 years, but only ₹11,837 for ₹1 crore, because the high sum assured rebate starts at ₹1 crore (13% at this age, 11% for older buyers). Twice the cover costs about 74% more, not 100% more.

Step 4: Mode rebate or loading

How often you pay also changes the cost. On traditional plans, LIC commonly gives about 2% off for yearly payment and 1% off for half-yearly, while quarterly and monthly get no rebate. Some plans instead add a loading on shorter modes; the effect is the same.

For our ₹10 lakh Jeevan Labh 736 example (age 30, 21 years):

Mode	Instalment	Paid in a year
Yearly	₹55,505	₹55,505
Half-yearly	₹28,051	₹56,102
Quarterly	₹14,175	₹56,700
Monthly (NACH)	₹4,725	₹56,700

Paying yearly instead of monthly saves ₹1,195 a year here, or about ₹17,900 over 15 years.

Step 5: Riders

Riders are optional add-ons with their own premium, charged per ₹1,000 of rider sum assured. In our Jeevan Labh 736 calculator:

• the Accidental Death and Disability Benefit rider is priced at about ₹1.50 per ₹1,000, so ₹1,500 a year for ₹10 lakh;
• the New Term Assurance rider is priced at about ₹2 per ₹1,000, so ₹2,000 a year for ₹10 lakh.

Taking both adds about ₹3,500 a year. The rider sum assured does not have to equal the base cover, and each plan’s brochure sets its own rider limits and age conditions.

Step 6: Health, habits and underwriting

The table rate assumes a standard healthy life. LIC can add an extra premium if medical reports show a condition such as high blood pressure or diabetes, or if your job is hazardous. For term plans, the table itself also differs by gender and tobacco use. In our Tech Term 954 calculator, ₹1 crore cover at age 30 for 30 years costs about:

• ₹11,837 a year for a male non-smoker,
• ₹14,205 for a male smoker,
• ₹10,654 for a female non-smoker.

What about GST?

Nothing is added. Premiums on individual life insurance policies have been exempt from GST since 22 September 2025, so the premium worked out above is the amount you pay. Before that date, traditional plans carried 4.5% GST in the first year and 2.25% after, and term plans 18%. Our GST on LIC premium guide explains the change and what it means for old receipts.

Worked example: Jeevan Labh 736, ₹10 lakh, age 30

Here is the full calculation for a 30-year-old choosing a 21-year term, 15-year premium payment and ₹10 lakh sum assured:

Step	Working	Amount
Tabular rate	₹11,701 ÷ 200 ÷ 0.98 (brochure sample for ₹2 lakh)	₹59.70 per ₹1,000
Tabular premium	59.70 × (10,00,000 ÷ 1,000)	₹59,699
High sum assured rebate	₹3 × (10,00,000 ÷ 1,000)	− ₹3,000
Premium after rebate		₹56,699
Yearly mode rebate	2% of the tabular ₹59,699	− ₹1,194
Yearly premium	rounded	₹55,505
Riders (optional)	ADDB + term rider	+ ₹3,500
GST	exempt since 22 Sep 2025	₹0

Without riders, the policyholder pays ₹55,505 a year for 15 years, a total of ₹8,32,575. Run the same steps with ₹2 lakh and no sum assured rebate and you get ₹11,701, exactly the brochure’s sample premium. You can reproduce this in the all-in-one premium calculator or the plan page linked above.

Why online quotes differ

If you have two quotes for the same plan and they do not match, one of these is usually the reason:

1. Different plan version. Most 9xx plans were withdrawn in October 2024 and relaunched as 7xx plans with new rates. A 936 quote is not a 736 quote.
2. Age rounding. One tool uses your completed age, another uses age nearest birthday.
3. Old GST. Calculators built before 22 September 2025 may still add 4.5% or 2.25% GST.
4. Riders included or not. An agent’s quote often includes ADDB or a term rider by default.
5. Rebate and rounding rules. Some tools skip the sum assured or mode rebate, or round differently.
6. Medical or occupational extra. Your final premium can be higher after underwriting.
7. Bonus illustrations mixed in. Some sites show “net cost” after assumed bonuses rather than the actual premium.

Always compare the same plan number, age, term, sum assured and mode.

How to lower your LIC premium

• Buy earlier. In our example, waiting from 30 to 35 raises the yearly premium by ₹883.
• Pay yearly. It is the cheapest mode on almost every plan.
• Cross a rebate slab. Going from ₹4 lakh to ₹5 lakh cover lowers the cost per lakh.
• Choose the term carefully. A longer term cuts the instalment; a shorter premium term cuts the total paid.
• Review riders. Keep the ones you need and drop duplicates of cover you already have.
• Separate protection from savings. For large life cover, a term plan through our term plan calculator costs a fraction of an endowment policy with the same sum assured.

Key takeaways

• LIC premium = tabular rate per ₹1,000 × sum assured ÷ 1,000, then rebates and riders.
• Age, term and sum assured set the rate; high sum assured and yearly payment bring it down.
• Riders and medical extras add to it.
• No GST applies on individual policies from 22 September 2025.
• Compare quotes only for the same plan version, age, term, cover and mode.