LIC sells three child plans in 2026. We compare their ages, premium terms, payouts and the premium waiver rider, using the same child and the same sum assured.
Quick answer
LIC paid-up value is the reduced amount a traditional policy keeps when you stop paying premiums after it has acquired a paid-up value. The formula is: sum assured × (premiums paid ÷ premiums payable) + bonuses already vested. It is paid at maturity, or to the nominee on earlier death. A paid-up policy stops earning new bonuses, and the final additional bonus is usually lost.
LIC paid-up value is what a traditional LIC policy is still worth if you stop paying premiums after it has run long enough. The sum assured is cut in proportion to the premiums you have paid, the bonuses already added stay, and the total is paid at maturity or on earlier death. Here is how it works, with the formula, a worked example and a comparison with surrendering.
When does an LIC policy become paid-up?
A policy turns paid-up automatically when a premium stays unpaid after the grace period, provided it has already acquired a paid-up value. You do not need to apply. If it has not yet reached that point, it simply lapses and nothing is payable.
| Policy | Acquires a paid-up value after |
|---|---|
| Most regular-premium plans issued before 1 Oct 2024 (8xx and 9xx series) | 2 full years’ premium |
| Some older plans (for example many pre-2014 plans) | 3 full years’ premium |
| Plans issued from 1 Oct 2024 (7xx relaunches) | Generally one full year’s premium, under IRDAI’s revised rules |
| Pure term plans with regular premiums | Usually no paid-up value; cover just ends |
| Single premium plans | Not applicable, the whole premium is already paid |
The exact condition is in the “Paid-up policy” clause of your policy document. Read it, because a few plans differ.
The LIC paid-up value formula
For an endowment-type plan, the basic formula is:
Paid-up value = sum assured × (premiums paid ÷ premiums payable) + vested bonus
Three details matter:
- The ratio uses the premium paying term, not the policy term. On Jeevan Labh, which has a 21-year term but only 15 years of premiums, 7 premiums paid gives a ratio of 7/15, not 7/21. Limited-premium plans therefore build paid-up value faster.
- Count premiums by period. With monthly or quarterly premiums, LIC compares the period for which premiums have been paid with the full period payable.
- Death and maturity are reduced separately. On death before maturity, the nominee gets the death sum assured reduced by the same ratio, plus vested bonus.
Money back plans use an adjusted version, because part of the sum assured is paid early. In LIC’s New Money Back 20 years plan (920), the maturity paid-up sum assured is:
(Sum assured on maturity + all survival benefits) × (premiums paid ÷ premiums payable) − survival benefits already paid
For a ₹5 lakh New Money Back 920 policy (15 years of premiums, 20% survival benefits at years 5, 10 and 15, and 40% at maturity) stopped after 8 premiums, that is ₹5,00,000 × 8/15 − ₹1,00,000 already received = ₹1,66,667, plus vested bonus. No further survival benefits are paid.
What happens to bonuses after a policy is paid-up?
This is where most of the value is lost:
- Vested bonuses stay. Every simple reversionary bonus added while the policy was in force remains attached and is paid with the paid-up sum assured.
- New bonuses stop. A paid-up policy no longer participates in LIC’s profits, so no reversionary bonus is added for the remaining years.
- Final additional bonus is usually lost. LIC’s brochures typically state that FAB is not payable under paid-up policies.
- Riders end. Accident and term riders acquire no paid-up value.
- A loan is still possible. On a paid-up policy LIC typically lends up to 80% of the surrender value, against 90% on an in-force policy.
For how bonuses build up in the first place, see our guide to how LIC bonus is calculated, or estimate yours with the LIC bonus calculator.
Worked example: Jeevan Labh 936 made paid-up
A 35-year-old bought Jeevan Labh 936 in 2017 with a ₹10 lakh sum assured, a 21-year term and 15 years of premiums. Our Jeevan Labh 936 calculator puts the yearly premium at ₹56,300. We assume an average bonus of ₹45 per ₹1,000 a year, our calculator’s default rather than a declared rate.
They paid 7 premiums (2017 to 2023) and stopped. The paid-up value is:
- Paid-up sum assured: ₹10,00,000 × 7/15 = ₹4,66,667
- Vested bonus: ₹45 × 1,000 × 7 years = ₹3,15,000
- Paid-up value: ₹7,81,667, payable at maturity in 2038 (age 56), or to the nominee on earlier death
Here is how the picture changes depending on when premiums stop, with surrender estimates from our LIC surrender value calculator:
| Premiums paid | Total paid | Paid-up sum assured | Vested bonus | Paid-up value at maturity | Surrender value now (est.) |
|---|---|---|---|---|---|
| 3 | ₹1,68,900 | ₹2,00,000 | ₹1,35,000 | ₹3,35,000 | ₹99,114 |
| 5 | ₹2,81,500 | ₹3,33,333 | ₹2,25,000 | ₹5,58,333 | ₹1,89,127 |
| 7 | ₹3,94,100 | ₹4,66,667 | ₹3,15,000 | ₹7,81,667 | ₹3,03,144 |
| 10 | ₹5,63,000 | ₹6,66,667 | ₹4,50,000 | ₹11,16,667 | ₹5,30,520 |
| 12 | ₹6,75,600 | ₹8,00,000 | ₹5,40,000 | ₹13,40,000 | ₹7,28,871 |
| All 15 (in force) | ₹8,44,500 | ₹10,00,000 | ₹9,45,000 + FAB | ₹20,95,000 | — |
The last row is the full maturity estimate, including a final additional bonus of ₹1,50,000 that our calculator assumes. Stopping after 7 premiums gives up roughly ₹13 lakh at maturity in exchange for not paying ₹4,50,400 of remaining premiums. The gap comes from the cut in sum assured, the 14 years of bonus that will never be added, and the lost FAB.
Paid-up vs surrender: which gives more?
Both options start from the same number. LIC’s special surrender value is essentially the paid-up value discounted back to today, because you take the money years early.
| Keep it paid-up | Surrender | |
|---|---|---|
| Money | ₹7,81,667 at maturity in 2038 | About ₹3,03,144 now (estimate) |
| Life cover | Reduced cover continues until 2038 | Ends immediately |
| Bonus already vested | Kept in full | Only its cash value is paid |
| Loan option | Up to about 80% of surrender value | None |
| Can be revived later | Yes, within 5 years of the first unpaid premium | No |
Our surrender estimate discounts the paid-up value at 7% a year, so waiting for maturity is like earning about 7% a year on the surrender value. That return is fixed, low-risk and, if the policy meets the conditions, tax-free. LIC’s actual surrender value can be higher or lower, so ask for a quote.
Keeping the policy paid-up generally makes sense when you only need to stop the outflow, not raise cash. Surrender makes sense when you need the money now, when the policy is near the start of its term and its paid-up value is small, or when you have a clearly better use for the money. Our guide to LIC surrender value rules explains how GSV and SSV are calculated.
Getting back to full cover
Making a policy paid-up is not final. Within 5 years of the first unpaid premium and before maturity, you can revive it by paying all missed premiums with interest and meeting LIC’s health requirements. The full sum assured returns and bonuses start again. If you stopped because of a temporary cash crunch, compare the revival cost with what you are giving up. Our guide to LIC lapsed policy revival shows how the interest is worked out.
Tax on a paid-up policy
Proceeds from a paid-up policy at maturity or on death are treated like any other life insurance payout. They are exempt under Section 11 read with Schedule II of the Income-tax Act, 2025 (earlier Section 10(10D)) if the policy meets the usual conditions, such as yearly premium within 10% of the sum assured for policies issued from April 2012 and, for policies issued from 1 April 2023, total yearly premium across such policies of up to ₹5 lakh. Death claims are exempt regardless. Premiums on individual life policies have been GST-exempt since 22 September 2025, which does not affect the paid-up value itself.
Key takeaways
- A policy turns paid-up automatically if you stop paying after it has acquired a paid-up value: usually after 2 full years on older LIC plans, and generally after 1 year on plans issued from 1 October 2024.
- Paid-up value = sum assured × (premiums paid ÷ premiums payable) + vested bonus; money back plans subtract survival benefits already paid.
- The ratio uses the premium paying term, so limited-premium plans keep more.
- Vested bonuses stay, but new bonuses, FAB and riders stop.
- The paid-up value is paid at maturity or on death, not when you stop paying.
- If you do not need cash now, staying paid-up usually returns more than surrendering, and revival within 5 years restores full cover.
This is an independent guide; we are not connected with LIC. The figures are estimates from our calculators. For your policy’s exact paid-up value, check LIC’s customer portal or ask your branch.
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Frequently asked questions
When does an LIC policy become paid-up?
On most LIC plans issued before 1 October 2024, a policy becomes paid-up if you stop paying after at least two full years' premium; a few older plans needed three. Plans issued from 1 October 2024 generally acquire a paid-up value after one full year's premium. Stop earlier and the policy simply lapses with nothing payable.
What is the formula for LIC paid-up value?
Paid-up value = sum assured × (number of premiums paid ÷ total number of premiums payable) + vested bonus. The ratio uses the premium paying term, not the policy term. For money back plans, survival benefits are added in first and those already paid are subtracted.
Does a paid-up LIC policy get bonus?
It keeps every simple reversionary bonus that vested while premiums were being paid, but it does not earn new bonuses after it becomes paid-up. Final additional bonus is usually not payable under paid-up policies. That is why a paid-up value is much lower than the full maturity amount.
When is the paid-up value paid?
At the original maturity date, or to the nominee if the life assured dies earlier. It is not paid out when the policy becomes paid-up. If you want cash now, you have to surrender the policy or take a loan against it instead.
Is it better to keep an LIC policy paid-up or surrender it?
If you do not need the money now, keeping it paid-up usually returns more, because the surrender value is the paid-up value discounted to today. Surrender only if you need the cash, or if you would rather invest it elsewhere at a clearly higher, comparable-risk return.
Can a paid-up LIC policy be made active again?
Yes. A paid-up policy can be revived within 5 years from the first unpaid premium, before maturity, by paying all missed premiums with interest and meeting LIC's health requirements. Revival restores the full sum assured and future bonuses.
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.