Our parents made sure that they purchased LIC Policies. The amount that they received at the maturity helped them in managing major expenses like that of children’s education, marriage and purchase of the home. The older generation always saw LIC Policies as an investment. Today, after the retirement, this generation advises their children to purchase the LIC Policy so that their future generation can safeguard themselves too. The LIC Policies are great if you are trying to save money. These policies enable you not only to save money, but they also help your family in case of any unfortunate event.
Today, there are a lot of different policies available from LIC that you can purchase. These policies have different premiums, tenure and benefits that they offer. You can choose the policy that you like. One of the most critical aspects of the LIC Policy is the premium that you will be paying and the tenure that you will be paying that premium for. A lot of us check out the premium calculations even before finalizing the policy that we need. In such a case, the Premium & Maturity Calculator proves to be a convenient tool. Let us learn more about the LIC Premium & Maturity Calculator now.
What is LIC Premium & Maturity Calculator?
This calculator will help you in getting an idea of the approximate premium that you will be paying for a given policy. The calculator will adjust the amount of the premium depending on the factors like your age, the sum assured, tenure of the policy, frequency of the payment and other such variables. These calculators are pretty accurate because the policy issuers themselves make available theses calculators. The calculator also helps you in getting an approximate amount that you will receive at maturity.
You might feel that the maturity doesn’t need any calculator, but at maturity, you do not only get the sum assured, but you also get the sum of annual bonuses that you receive during the policy years. These two numbers can help you in making a quick decision if you would like to purchase the policy or not. You can compare the expense with the amount that you will receive on maturity, and this way, you can easily calculate the appreciation in your investment.
What all do I need to calculate the premium & maturity?
You would need to enter specific details to get the details of the premium & maturity. All these details would be readily available to you, and it will take even less than a minute to fill in the whole form. The calculator will then perform calculations in the backend, and it will throw the result. The result will indicate the premium that you would be paying along with the sum that you will be receiving at the maturity. Let us now look at the variables that you would need to enter while calculating the premium.
- Plan Type & Name
- Age of Applicant
- Sum Assured
- Payment Frequency (Monthly, Bi-Annual or Annual)
- Tenure of Policy
- Riders if Applicable
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More about LIC Premium
It should be noted that there are multiple types of policies when we look at them from a premium perspective. You will come across the policies wherein the premium needs to be paid only once. These policies are one-time premium policies. There are policies wherein you would need to pay the premium until the maturity, and there are also some policies wherein you would need to pay the premium for a specific time. In the last category, the premium period is less than the maturity date. One example of this type of policy could be the Jiwan Labh Policy. In this policy, if you are choosing the maturity period of 21 years, then the premium terms are 15 years.
You might already be aware of the fact that the LIC Policy is only valid till the time you pay the premium. In case of missed premium, you get an extension of a month wherein you can pay the premium without any penalty. After this one month, you will be charged penalty for the delay. If you still do not pay the premium, the policy will lapse, and the department will fortify the premium that you have paid until now.
LIC is usually very flexible with premium payments. At the time of purchasing the policy, you get the freedom to choose the payment frequency. The options include yearly, semi-annual, quarterly and monthly payment. You can even change the frequency in the middle of the policy by merely submitting an application to LIC.
How is the Premium Amount Decided?
The amount of premium is decided based on many factors. The main factor governing the premium is the type of plan, the sum assured and the policy duration. Moreover, a young person has less risk associated with his life when compared to the older person. In such a case, the premium will also be lower. Usually, the premium rises exponentially when the person turns 50.
Moreover, the LIC also evaluates if you smoke or not. The premium paid by smokers is even higher than the premium paid by the non-smokers. Some of the policies also require you to go through the mandatory medical check.
In such a case, the premium calculator proves to be very handy. It can help you in customizing your plan according to your payment capacity. The calculator will also save your time by understanding what sum assure should you choose.
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Example of Premium Calculator
Below is the example of the premium calculator. We have listed the details of parameters that we entered, and we have documented the output of the calculator as well. You can check out the scenario and using the calculator; you can also try various other permutations and combination to find out the premium. So, go ahead and check out the details now.
Age – 30
Gender – Male
Plan – LIC’s Jeevan Labh (Plan-936) (Endowment)
Sum Assured – Rs 7,20,000
Policy Term – 21 Years
After entering these variables, we got the results on the amount of premium that we will be paying after the tax. Check out the details below.
Yearly Premium – 39,577 (37,873 (Basic Premium) + 1,704 (Tax))
Half-Yearly Premium – 19,995 (19,134 (Basic Premium) + 861 (Tax))
Quarterly Premium – 10,101 (9,666 (Basic Premium) + 435 (Tax))
Monthly Premium – 3,367 (3,222 (Basic Premium) + 145 (Tax))
On the next screen, you can adjust the Sum Assured to get the amount of premium that you will be paying on the amended sum assured. This amount can be looked at after you click on the Get Variation Button. If you would like to know the maturity amount, then you can click on the Get Illustration Button. This button will show you the details of the guaranteed benefits, non-guaranteed benefits and surrender benefits. You can look at the screenshot below to understand more information about the premium and the services that you receive.
What is the Annual Bonus?
LIC gives the annual bonus as a benefit to all the policyholders. This amount varies as per the market conditions and the LIC’s performance. In most of the cases, it is observed that you get at least 8% benefit over the sum assured. However, this can’t be guaranteed. The amount of bonus that you receive can be greater, and it can also be lower. LIC publishes the bonus rates annually and you this way, you can check the amount of bonus that you are gathering.
For example, the bonus for 2018-2019 for Jeevan Labh is listed below
|Term ( in Years)||Bonus (per Thousand)|
If you consider the policy calculations that we did above, then we would need to consider the policy term of 21 years. Since the sum assured was Rs 7,20,000/-. The bonus that you will receive for 2018-2019 would be equal to 47*720. This turns out to be Rs 33840. This amount will be added to your sum assured at the time of the maturity. Now imagine, the sum of the bonuses for 21 years getting added. The amount will be a lot greater than the sum assured amount.
We have covered all the possible details about the LIC Premium Calculator, but we understand that you might still have some questions about it. You can review the answers of some of the Frequently Asked Questions in the section below.
LIC Premium Calculator Frequently Asked Questions
Q: What are the factors determining the rate of insurance?
A: Multiple factors will determine the rate of insurance. Some factors may not apply to your policy while others may apply. The list includes gender, BMI, dependents, marital status, medical history, income, occupation, debt, smoking habits, drinking habits, involvement in adventure sports, travel history etc.
Q: How to calculate the insurance premium?
A: You can use the LIC Premium & Maturity Calculator to calculate the premium as well as the maturity amount of the policy that you are interested in. You can use the calculator to compare multiple policies and multiple variables.
Q: Where can I find the bonus information?
A: The bonus information is available on the LIC Website, and you would need to check out the page for more details. The bonus information is published annually, and it is only paid at the time of maturity.
Q: I need money. Can I surrender my policy?
A: Yes, you can surrender your policy, but the surrender value is a lot lower than you would anticipate. The smarter option would be to take a loan on the policy. You can usually take a loan after five years of the policy period. If you are taking a loan on the policy, the interest rate would also be lower.
Q: Is this premium tax deductible?
A: Yes, the premium is tax-deductible, and the premium paid till Rs 1.5 Lakh can be used for availing tax benefits.