LIC Jeevan Labh (Plan 736) is a limited premium paying endowment assurance plan. It provides both life insurance protection and long-term savings while allowing participation in LIC’s bonus profits. As a non-linked plan, it is free from market risks but still rewards policyholders with Simple Reversionary Bonuses and a possible Final Additional Bonus.

One main feature of this plan is that premiums are paid for only a short period, but the risk coverage lasts for the entire policy term. This makes it great for savers who want security without long-term payments. The policy offers flexible terms of 16, 21, or 25 years, with a minimum sum assured of ₹2,00,000 and no upper limit, making it suitable for various financial needs.

At maturity, it pays out the Basic Sum Assured plus bonuses. If death occurs during the policy term, it provides strong family protection with higher benefits. To assist potential buyers and policyholders in understanding the maturity value, death cover, and returns based on their premium input, we’ve developed an easy-to-use LIC Jeevan Labh Calculator. This tool clearly displays all these details in a simple and modern interface.

LIC Jeevan Labh Details

LIC Jeevan Labh Calculator Calculations

Let’s look at how LIC Jeevan Labh works with a practical example. Imagine you take this policy with an annual premium of ₹50,000 and choose a policy term of 16 years. We will go through each important term and benefit that applies to you, step by step.

Policy Term: In this example, the policy lasts for sixteen years. This means the contract stays active for that duration. If the life assured survives until the end of year sixteen, the policy will pay the maturity benefit at that point. The length of the policy affects how many years bonuses can accumulate and if any final additional bonus might apply.

Premium Paying Term (PPT): For a sixteen-year Jeevan Labh policy, you pay premiums for ten years. You need to pay fifty thousand rupees each year for the first ten years, after which no further payments are necessary. You still keep the life cover and accumulate bonuses for the entire sixteen-year term of the policy. The total premiums paid in this example amount to fifty thousand times ten, which equals five lakh rupees.

Sum Assured (SA) and how it was derived: The Sum Assured is the basic guaranteed amount on which bonuses and many benefits are based. In the calculator, we used the simple formula SA = 10 times the annual premium. Here, fifty thousand multiplied by ten gives a Sum Assured of five lakh rupees. If you want a different calculation method, such as using the official LIC premium-to-SA rate table, we can adjust the calculator to compute SA using the exact rate per 1000 of SA.

Simple Reversionary Bonus (SRB): The simple reversionary bonus is the annual bonus that LIC declares for each one thousand rupees of Sum Assured. Using the illustrative SRB of forty-five rupees per thousand, first calculate the yearly bonus for this SA: divide the SA by one thousand, which gives five hundred, and multiply by forty-five. This results in a yearly bonus of twenty-two thousand five hundred rupees. Over the full sixteen-year policy term, this yearly addition totals twenty-two thousand five hundred times sixteen, which equals three lakh sixty thousand rupees in total simple reversionary bonuses.

Final Additional Bonus (FAB): The final additional bonus is a one-time extra amount that LIC might declare for policies that complete their term. Using the illustrative FAB of fifty rupees per thousand, calculate FAB by multiplying fifty by five hundred (the SA in thousands). This produces a FAB of twenty-five thousand rupees, payable at maturity or, if applicable, upon death in the final policy year.

Maturity benefit: The maturity benefit is the Sum Assured plus the total simple reversionary bonus plus the FAB. In this case, that is five lakh rupees plus three lakh sixty thousand rupees plus twenty-five thousand rupees, resulting in an estimated maturity payout of eight lakh eighty-five thousand rupees. You paid five lakh rupees in total premiums, so the actual gain is the maturity amount minus premiums paid, which is roughly three lakh eighty-five thousand rupees.

Death benefit: If the life assured dies during the policy term, the nominee receives the higher amount of either the Sum Assured or seven times the annual premium, plus any bonuses accrued up to that year. Here, seven times the annual premium equals three lakh fifty thousand rupees, which is less than the SA of five lakh. Therefore, the base death cover is ₹ 5 lakh. If death occurs in year five, the accrued bonus would be twenty-two thousand five hundred times five, amounting to one lakh twelve thousand five hundred rupees. The death benefit would be the five lakh base plus the accrued bonus, totaling approximately six lakh twelve thousand five hundred rupees. If death occurs in year ten, the vested bonus would be two lakh twenty-five thousand, resulting in a death benefit of about seven lakh twenty-five thousand rupees. If death occurs in year fifteen, the vested bonus would amount to three lakh thirty-seven thousand five hundred, leading to a benefit of around eight lakh thirty-seven thousand five hundred rupees.

Understanding Surrender Value in LIC Jeevan Labh

When a policyholder chooses to end the LIC Jeevan Labh policy before its maturity, LIC pays a surrender value. This amount replaces the maturity benefit. The surrender value is always significantly lower than the maturity amount because this policy is meant as a long-term savings and insurance plan. LIC calculates it using two methods: the Guaranteed Surrender Value (GSV) and the Special Surrender Value (SSV). The policyholder receives the higher of the two.

Guaranteed Surrender Value (GSV)

The Guaranteed Surrender Value is the minimum benefit offered if the policy is surrendered after the policyholder has paid at least three full years of premiums. It is calculated as a percentage of the total premiums paid, excluding the first year’s premium. This percentage, known as the GSV factor, depends on how long the policy has been active.

GSV = (Total Premiums Paid – First Year Premium) × GSV Factor

Additionally, LIC may apply a guaranteed value to the accrued bonuses, which usually ranges from 80% to 90% of the bonuses earned by the surrender date.

Special Surrender Value (SSV)

The Special Surrender Value is generally more beneficial than GSV because it reflects the actual savings accumulated in the policy. It is related to the Paid-Up Value and the accrued bonus. The Paid-Up Value indicates the portion of the Sum Assured corresponding to the years for which premiums have been paid.

Paid-Up Value = (Number of Premiums Paid ÷ Total Premiums Payable) × Sum Assured

Once the Paid-Up Value is determined, it is added to the accrued bonus. The total is then multiplied by an SSV factor declared by LIC, which depends on how long the policy has been in force.

SSV = (Paid-Up Value + Accrued Bonus) × SSV Factor

Final Surrender Value

The actual surrender value paid to the policyholder is the higher amount of GSV or SSV.

Surrender Value = max(GSV, SSV)

Example with Numbers

Suppose a policyholder took an LIC Jeevan Labh policy with an annual premium of ₹50,000, a Sum Assured of ₹5,00,000, and a policy term of 16 years with a Premium Paying Term of 10 years. If the policy is surrendered after 7 years:

Total Premiums Paid = ₹3,50,000, First Year Premium = ₹50,000

Accrued Bonus per year = ₹22,500 (calculated at ₹45 per 1000 SA)

Total Accrued Bonus in 7 years = ₹1,57,500

• Step 1: Calculate GSV
• Assume GSV Factor = 30%,
• GSV = (3,50,000 − 50,000) × 30% = 3,00,000 × 0.3 = 90,000
• add the guaranteed portion of the bonus, say 80% of ₹1,57,500 = ₹1,26,000. So, GSV ≈ ₹2,16,000.
• Step 2: Calculate SSV
• Paid-Up Value = (7 ÷ 10) × 5,00,000 = ₹3,50,000
• Accrued Bonus = ₹1,57,500
• Total = ₹5,07,500
• Assume SSV Factor = 0.4 SSV=5,07,500×0.4=2,03,000\text{SSV} = 5,07,500 \times 0.4 = 2,03,000SSV=5,07,500×0.4=2,03,000

• Step 3: Final Surrender Value
• Compare both: GSV = ₹2,16,000 and SSV = ₹2,03,000.
• The higher amount, ₹2,16,000, will be the surrender value payable.

About The Author