LIC Bonus Explained: Reversionary, Final Additional & Guaranteed Additions

What LIC bonuses are, how simple reversionary bonus and final additional bonus work, and how guaranteed and loyalty additions differ.

"How much bonus will I get?" is one of the most common questions families ask about an LIC policy. The honest answer is that it depends on the type of plan and on what LIC declares in future. This guide explains how bonuses work, so you know what to expect and what is not guaranteed.

Participating vs non-participating plans

Every LIC plan brochure says on its first page whether the plan is "Par" or "Non-Par".

In a par plan, part of your benefit depends on LIC's experience over the years. In a non-par plan, the benefits are set out at the start and do not depend on profits. The Amritbaal brochure, for example, says the plan is not entitled to bonus or any share in surplus.

Simple Reversionary Bonus

This is the main bonus in most LIC par plans.

• It is declared every year, at the end of the financial year, based on LIC's experience.
• It is stated as an amount per ₹1,000 of Basic Sum Assured.
• It is "simple", which means it is calculated on the sum assured only, not on bonuses added earlier.
• It is "reversionary", which means it is not paid to you each year. It is added to your policy and paid out later, at maturity or on death.

The most reassuring point: according to the plan 715 brochure, once a simple reversionary bonus is declared, it becomes part of the guaranteed benefits of the policy. In insurance language, the bonus has vested.

Future bonuses are not guaranteed. LIC may declare more, less or none in a given year.

Final Additional Bonus (FAB)

This is a one-time extra bonus that LIC may declare in the year the policy ends in a claim, either by death during the term or on maturity. It usually rewards policies that have stayed in force for a long time. In plan 715, the FAB is not payable on paid-up policies, so stopping premiums can mean losing it.

Guaranteed Additions

Guaranteed Additions are amounts added to your policy at a fixed rate stated in the brochure, usually per ₹1,000 of Basic Sum Assured each policy year. Unlike reversionary bonus, the rate is known on day one.

They appear in both non-par plans (such as Amritbaal 774) and some par plans (such as Bima Shree 748). Conditions apply, for example premiums must be paid, and the rules for paid-up or surrendered policies differ by plan.

Loyalty Additions

Some plans offer a Loyalty Addition, a lump sum that LIC may declare for policies that have stayed in force for a minimum period. In Bima Shree (748), for example, it can be paid on death or maturity after the policy has completed five policy years with at least five full years' premiums paid. Like FAB, it depends on LIC's experience and is not guaranteed in advance.

How it adds up (illustration only)

Imagine a par endowment policy with a Basic Sum Assured of ₹5 lakh and a 20-year term, where all premiums are paid.

• Each year, LIC declares a simple reversionary bonus of ₹X per ₹1,000. That year's bonus is ₹X × 500, and it is added to the policy.
• After 20 years, the total vested bonus is the sum of all 20 yearly additions.
• At maturity, the payout is the Sum Assured on Maturity + total vested bonuses + any FAB declared that year.

We have used ₹X because actual bonus rates change from year to year and are never promised in advance.

Things to remember

• Bonuses are added only while the policy is in force. If premiums stop, the policy stops sharing in future profits, though vested bonuses usually stay attached.
• If you surrender, you get only a surrender value of vested bonuses, not the full amount. See surrender value and paid-up value.
• Be careful of anyone who promises a fixed bonus on a par plan.
• Words like "vested" and "par" are also in our insurance glossary.

To see how bonuses could affect your payout, try the maturity calculator or ask us.