LIC Policies - Things to Know
It is important to note that the Tenure is 20 years here.
- If you plan to surrender your policy prior to three years you will get nothing in return. You are required to continue with the policy for a minimum of 3 years if you wish to get something in return of what you have invested.
- After continuing your policy for three years you will be in a position to surrender the policy and will receive some reduced amount in return. What you gain is a minimum 30% of premiums paid and this would not include the premium of first year. This is applicable in case you surrender your policy within 4th – 6th year of policy.
- Further, if you continue your policy and surrender it between 6th – 15th year then you will receive only the accrued bonus.
- If you surrender your policy anywhere after 15th year, you will be entitled to receive Final Additional Bonus (FAB).
- If you continue with your policy till 20 years then you might as well receive a Loyalty Bonus (if applicable.)
- Simple Reversionary Bonus – When we say “Bonus”, it is “Simple Reversionary Bonus” that we are talking about. This bonus is declared at the end of every financial year and it is per thousand of the Sum Assured on annual basis. The bonus is declared in advance, however it is paid off only when your policy matures or at the death of the policy holder, whichever is earlier. This may be viewed as a good option however the catch is that the value of bonus in today’s monetary terms would have lost its value after 20 years.
- Final Additional Bonus – The final additional bonus in LIC is also referred to as FAB. This bonus is applicable to policies that are of longer duration and you get entitled to receive FAB only when your policy has completed 15 years which means that you have paid premiums towards your policy continuously for 15 years. If you hold a policy that offers to pay “Guaranteed Additions” then FAB would not be applicable.
- Guaranteed Additions – You might have come across this term while going through certain LIC policies. LIC Jeevan Shree-1 is an example of this type of policy. When LIC says Guaranteed Additions, it refers to the additional amount or assured sums that you will receive for a specific period at the beginning or at the end of some event in addition to the sum assured at the maturity. Jeevan Shree-1 offers Rs 50 per Rs 1000 Sum Assured for each completed year for the initial 5 years.
- Loyalty Additions – If you stay connected with LIC by paying premiums and continuing with the policy for a longer period then your loyalty is applauded and appreciated – the LIC pays you a Loyalty Addition. In most cases this bonus is declared at the end of the policy but in few it may be declared after completing 5 years or 10 years of the policy. For example – if we talk of Jeevan Saral, you earn this bonus once you have completed 10 years of policy. Generally, this amount is declared per thousand of sum assured but corporation’s performance also plays a key role in deciding this amount.