There is no single best LIC policy. Here are the currently sold LIC plans that fit each goal, from term cover to pension, with real premium examples.
Quick answer
LIC declares a simple reversionary bonus every year as a rupee amount per ₹1,000 of basic sum assured. Multiply the rate by (sum assured ÷ 1,000) to get that year's bonus, then add up every year's bonus. At maturity you get the sum assured, all reversionary bonuses and any final additional bonus. At ₹45 per ₹1,000, a ₹10 lakh policy gains ₹45,000 of bonus a year.
An LIC bonus is your share of LIC’s profit on with-profit (participating) policies. Every year LIC declares a rate per ₹1,000 of sum assured, and that amount is added to your policy and paid when it matures or on a death claim. This guide explains how the LIC bonus rate works, how to calculate your own bonus, and which plans earn one.
What is an LIC bonus?
When you buy a with-profit LIC plan, part of your premium goes into LIC’s participating fund. LIC invests this money, and at the end of each financial year its actuary values the fund. If the assets are worth more than what LIC owes on those policies, the extra is called a surplus. Most of that surplus is shared with policyholders as bonus.
Three points matter most:
- The bonus is declared, not promised. The rate depends on how the fund performed and can change every year.
- Once a year’s bonus is declared and attached to your policy, it vests, meaning it becomes part of your benefit and is not taken back.
- It is paid at the end, together with the maturity amount or the death claim. You do not receive it as cash each year.
Simple reversionary bonus (SRB) per ₹1,000
The main bonus is the simple reversionary bonus. “Simple” means it is calculated on the basic sum assured only. It is not added on top of earlier bonuses, so there is no compounding. “Reversionary” means it is paid later, at maturity or death.
The formula is:
Yearly bonus = (basic sum assured ÷ 1,000) × bonus rate
For a ₹10 lakh policy with a declared rate of ₹45 per ₹1,000:
- 10,00,000 ÷ 1,000 = 1,000 units
- 1,000 × ₹45 = ₹45,000 bonus for that year
Over a 21-year term, if the rate stayed at ₹45 every year, you would build up 21 × ₹45,000 = ₹9,45,000 in reversionary bonus. In reality the rate changes each year, so your final total is the sum of every year’s declared rate.
Final additional bonus (FAB)
The final additional bonus is a one-time amount paid with the maturity or death claim. LIC usually declares it for policies that have been in force for a longer period, often 15 years or more, and the rate tends to be higher for longer terms. It is also declared per ₹1,000 of sum assured.
FAB is less predictable than the yearly bonus. It is not attached to the policy in advance, so you only know the amount when the claim is paid. When you estimate maturity, it is sensible to run one scenario with FAB set to zero.
Loyalty additions vs guaranteed additions
Not every LIC plan uses the reversionary bonus system. Two other terms often cause confusion:
| Feature | Loyalty additions | Guaranteed additions |
|---|---|---|
| Plan type | With-profit plans such as Jeevan Saral, Bima Shree and Aadhaar Shila | Non-participating plans such as Jeevan Utsav, Bima Jyoti and Amritbaal |
| Guaranteed? | No, depends on LIC’s experience | Yes, fixed in the policy document |
| When declared | At maturity or death, usually after a minimum number of years | Fixed rate added every policy year |
| Example | Declared per ₹1,000 when the claim is paid | Amritbaal 774: ₹80 per ₹1,000 each year |
Loyalty additions work much like a final bonus. Guaranteed additions are not a bonus at all: the amount is written into the contract on day one. That certainty usually comes with a lower overall return. You can see how it works in the Amritbaal 774 calculator or the Jeevan Utsav 771 calculator.
Which LIC plans are with-profit?
Popular participating (with-profit) plans that earn a reversionary bonus include:
- New Endowment (714, earlier 914) and New Jeevan Anand (715, earlier 915)
- Jeevan Labh (736, earlier 936) and Jeevan Lakshya (733, earlier 933)
- Jeevan Umang (745, earlier 945) and Jeevan Tarun (734, earlier 934)
- New Money Back (720 and 721) and New Children’s Money Back (732)
- Single Premium Endowment (717)
Plans that do not earn a bonus: term plans (Digi Term, New Jeevan Amar, New Tech Term), non-participating savings plans (Jeevan Utsav, Bima Jyoti, Dhan Rekha, Jeevan Azad, Amritbaal) and ULIPs (SIIP, Nivesh Plus, Index Plus). The plan brochure or policy document states “participating” or “with profits” when a bonus applies.
How LIC declares its bonus every year
LIC values its participating business as at 31 March each year. After the valuation, its board approves the surplus distribution, and LIC publishes bonus rates per ₹1,000 of sum assured for each plan and policy term. For some plans the rate can also differ by sum assured band.
The overall size of the pay-out is announced with LIC’s annual results. In its press release of 21 May 2026, LIC said it had allocated ₹59,726 crore as bonus to policyholders for 2025-26, compared with ₹56,190 crore for 2024-25 (announced on 27 May 2025). This is the total across all policies. It does not tell you the rate for your plan, so check LIC’s plan-wise bonus declaration for that.
Illustrative LIC bonus rate table
The table below shows the indicative simple reversionary bonus rates our LIC bonus calculator uses as defaults. They are based on past declarations and are not LIC’s latest declared rates. Newer 7xx plans can carry different, sometimes lower, rates in their early years.
| Plan | Policy term | Indicative SRB per ₹1,000 | Yearly bonus on ₹10 lakh |
|---|---|---|---|
| New Endowment (714/914) | 16 years | ₹39 | ₹39,000 |
| New Endowment (714/914) | 21 years | ₹45 | ₹45,000 |
| New Jeevan Anand (715/915) | 21 years | ₹46 | ₹46,000 |
| Jeevan Labh (736/936) | 16 / 21 / 25 years | ₹42 / ₹46 / ₹49 | ₹42,000 / ₹46,000 / ₹49,000 |
| Jeevan Umang (745/945) | 25 years | ₹45 | ₹45,000 |
| New Money Back 20 years (720) | 20 years | ₹44 | ₹44,000 |
| Single Premium Endowment (717) | 10 years | ₹34 | ₹34,000 |
Two patterns are clear. Longer terms usually earn higher rates, and endowment-type plans usually earn a little more than money back plans, because money back plans pay part of the sum assured early.
Worked example: bonus and maturity on a ₹10 lakh policy
Take a 30-year-old who bought New Endowment Plan 914 with a ₹10 lakh sum assured for 21 years. Our New Endowment 914 calculator puts the yearly premium at about ₹46,882, so the total paid over 21 years is ₹9,84,522. Here is what the LIC maturity calculator shows for different average bonus rates:
| Average SRB per ₹1,000 | FAB per ₹1,000 | Total bonus | Maturity amount | Return (IRR) |
|---|---|---|---|---|
| ₹35 | ₹0 | ₹7,35,000 | ₹17,35,000 | 4.89% |
| ₹40 | ₹0 | ₹8,40,000 | ₹18,40,000 | 5.37% |
| ₹40 | ₹20 | ₹8,60,000 | ₹18,60,000 | 5.46% |
| ₹45 | ₹0 | ₹9,45,000 | ₹19,45,000 | 5.82% |
| ₹45 | ₹100 | ₹10,45,000 | ₹20,45,000 | 6.23% |
Take the ₹40 row as a middle case: 1,000 units × ₹40 × 21 years = ₹8,40,000 of reversionary bonus. Add the ₹10 lakh sum assured and a ₹20,000 FAB (1,000 × ₹20) and the maturity amount comes to ₹18,60,000.
After 10 policy years at ₹40, about ₹4,00,000 of bonus would already have vested, with 11 years still to go. A ₹5 difference in the average rate moves the maturity amount by about ₹1 lakh, which is why the rate you assume matters so much.
Tip: Plan your goals on the cautious row (₹35–40 and no FAB). If LIC declares more, treat it as a bonus in both senses.
Common mistakes when estimating LIC bonus
- Treating the rate as a percentage. ₹45 per ₹1,000 is 4.5% of the sum assured each year, not 4.5% interest on your premiums. Your real return is far lower, as the IRR column shows.
- Compounding the bonus. Simple reversionary bonus does not earn bonus on itself.
- Using one year’s rate for the whole term. Rates change. Use a long-term average.
- Counting FAB as certain. It is declared only at claim time.
- Forgetting paid-up rules. If you stop paying premiums, future bonuses usually stop. Read our guide to LIC surrender value rules before you stop paying premiums.
Key takeaways
- LIC bonus = (sum assured ÷ 1,000) × declared rate, added every year and paid at maturity or death.
- The simple reversionary bonus does not compound. The final additional bonus is a one-time extra and is not guaranteed.
- Guaranteed additions (Jeevan Utsav, Amritbaal, Bima Jyoti) are fixed in advance. Loyalty additions and bonuses are not.
- LIC allocated ₹59,726 crore as bonus for 2025-26, but your plan’s rate is what counts.
- Use the bonus calculator with a cautious rate to plan, and treat any extra as upside.
All figures on this page are estimates from our independent calculators. They are not LIC quotes. Check your policy’s bonus statement with LIC for the exact amount already vested.
Try these calculators
Frequently asked questions
What does an LIC bonus rate of ₹45 per ₹1,000 mean?
It means LIC adds ₹45 for every ₹1,000 of basic sum assured for that year. On a ₹5 lakh policy that is 500 × ₹45 = ₹22,500 of bonus for the year. The bonus is added to the policy and paid with the maturity or death claim, not in cash each year.
Is the LIC bonus guaranteed?
No. The simple reversionary bonus depends on LIC's surplus and is declared year by year. Once a year's bonus is declared and attached to your policy, it is not taken away, but future rates can go up or down. Only guaranteed additions in non-participating plans are fixed in advance.
What is the final additional bonus in LIC?
It is a one-time bonus paid with the maturity or death claim, usually on longer policies that have run for a qualifying period, often 15 years or more. It is declared per ₹1,000 of sum assured, varies by plan, term and sometimes sum assured, and is not guaranteed.
Does LIC give bonus on term plans and ULIPs?
No. Term plans such as Digi Term or Jeevan Amar pay only a death benefit, and ULIPs such as SIIP earn market-linked fund returns. Non-participating savings plans like Jeevan Utsav or Bima Jyoti pay guaranteed additions instead of a bonus.
Do I get the bonus if I stop paying premiums?
Bonuses already declared stay with the policy. If the policy becomes paid-up, it usually stops earning new reversionary bonuses, and the final additional bonus is normally lost. If you surrender, only a part of the accrued bonus is paid as its cash value.
How much bonus did LIC declare for 2025-26?
In its results press release dated 21 May 2026, LIC said it allocated ₹59,726 crore as bonus to policyholders for 2025-26, up from ₹56,190 crore for 2024-25. Plan-wise rates per ₹1,000 are published separately by LIC; check them for your exact plan and term.
Is the bonus received on LIC maturity taxable?
Bonus is part of the maturity amount. It is tax-free along with the sum assured when the policy meets the Section 11 read with Schedule II of the Income-tax Act, 2025 (earlier Section 10(10D)) conditions, such as premium within 10% of the sum assured and, for policies issued from 1 April 2023, total yearly premium up to ₹5 lakh.
Disclaimer: LIC Premium Calculators is an independent website. We are not affiliated with, endorsed by or connected to Life Insurance Corporation of India. All figures are estimates for illustration; confirm exact premiums and benefits with LIC or a licensed agent before buying.