LIC (Life Insurance Corporation of India) endowment plans are the most popular insurance products in India. Unlike pure term insurance, LIC endowment plans return a maturity benefit at the end of the policy term if the policyholder survives. The maturity amount includes the sum assured plus accumulated bonuses. LIC declares bonuses every year, called Simple Reversionary Bonus (SRB), expressed as ₹ per ₹1,000 of sum assured.
Worked Example:
SA = ₹10,00,000 | Annual premium = ₹50,000 | Term = 20 years | Bonus = ₹47/₹1000
Total bonus = (10,00,000 ÷ 1000) × 47 × 20 = ₹9,40,000
Estimated maturity = 10,00,000 + 9,40,000 = ₹19,40,000
Total premium paid = 50,000 × 20 = ₹10,00,000 | Returns ≈ 4.7% CAGR
Is LIC endowment plan a good investment?▾
LIC endowment plans offer guaranteed returns but typically at 4-5% CAGR, lower than PPF (7.1%), FD (7%), or SIP (12%+ historically). They are better viewed as life insurance + forced savings, not pure investments. If investment returns are your priority, buy term insurance separately and invest the rest in mutual funds.
What is LIC's current bonus rate?▾
LIC declares a Simple Reversionary Bonus of ₹40-55 per ₹1,000 SA depending on the plan. Jeevan Anand: ₹45/₹1000. New Endowment Plan: ₹40/₹1000. Check your specific plan document or LIC website for the exact declared rate.
Can I surrender my LIC policy midway?▾
Yes, LIC policies can be surrendered after paying premiums for at least 3 years. The Surrender Value is typically 30-50% of premiums paid (excluding first year). Surrendering early is a significant financial loss. Consider taking a loan against the policy instead.
Are LIC maturity benefits taxable?▾
LIC maturity benefits are tax-free under Section 10(10D) if the annual premium does not exceed 10% of the sum assured. If premium exceeds 10% of SA, the maturity amount becomes taxable (for policies issued after April 2012). Death claims are always fully tax-free.