When a life insurer announces a new bonus, it often sparks a flurry of questions among its policyholders. In early 2024, Life Insurance Corporation of India (LIC) declared a record 17.5 % bonus for certain long‑term plans. For those who hold a Jeevan Anand, Jeevan Rattan, or New Jeevan Anand policy, this figure translates into a noticeable lift in the accumulated value and the eventual payout at maturity.
LIC bonuses are added to a policy’s accumulated value each year. There are two main types:
For the plans affected by the 17.5 % announcement, the bonus is reversionary. It is calculated as a percentage of the sum assured, which means a higher sum assured yields a higher bonus amount. The figure is applied to each policy’s base premium amount, and the resulting bonus is credited to the policy’s accumulated value at the end of the financial year.
LIC’s board meeting on 14th January 2024 approved the 17.5 % bonus for the following plans:
Under this policy, the bonus is calculated as 17.5 rupees for every 1,000 rupees of sum assured. If you have a sum assured of 5 lakh rupees, the bonus added for one year would be 17.5 % of 5 lakh, which equals 87,500 rupees. Over a 20‑year term, that accumulates to a substantial increase in the policy’s maturity value.
Let’s look at a practical example. Suppose you purchased a New Jeevan Anand policy in 2020 with a sum assured of 10 lakh rupees and a premium of 20,000 rupees per year. After 20 years, the base maturity amount would be 10 lakh rupees. Adding the 17.5 % bonus each year, your accumulated value rises by 175,000 rupees annually. Over the full term, the bonus contributes approximately 3.5 lakh rupees to the final payout.
That extra sum can play a vital role in meeting future financial goals, such as funding a child’s education, covering medical expenses, or supplementing retirement income. In many families, this added cushion can mean the difference between a comfortable life and having to seek additional loans.
LIC bonuses are taxable under the head “Other Income” in the year they are credited. However, the tax treatment changes when the bonus is received at maturity. If you hold a policy for at least 15 years, the bonus is exempt from tax under Section 10(10C) of the Income Tax Act. For policies held for less than 15 years, the bonus is taxable as income for the year it is added.
Policyholders in India should keep a record of the bonus amounts credited each year. This documentation helps in filing accurate tax returns and claiming any applicable deductions or exemptions.
The bonus is automatically added to the policy’s accumulated value at the end of each financial year. There is no separate claim process. However, if you want to use the bonus for a specific purpose—such as buying a house or investing in a mutual fund—you can do so by opting for a partial withdrawal or a policy loan.
To initiate a partial withdrawal, contact your LIC branch or log in to the LIC online portal and select the “Withdraw” option. For a loan against the policy, you’ll need to submit a loan application form and provide the required documents. The loan amount is usually up to 90 % of the policy’s accumulated value, and the interest rate is fixed at 7.5 % per annum (subject to change).
Q: Will the 17.5 % bonus be added to my policy if I already paid the premium for 2023?
A: Yes. The bonus is credited at the end of the financial year, so any premium paid in 2023 will benefit from the 2023 bonus, and future premiums will continue to accrue the same rate.
Q: Does the bonus affect the maturity date?
A: No. The bonus only increases the accumulated value; the policy’s term and maturity date remain unchanged.
Q: Can I switch to a different LIC plan to take advantage of this bonus?
A: You can consider switching only if the new plan offers a higher bonus or better benefits. However, switching may reset the bonus accumulation, so it’s wise to weigh the long‑term impact.
1. Review your policy statement each year to confirm the bonus has been added. If you notice a discrepancy, reach out to LIC customer support within 30 days.
2. Keep a separate ledger for bonuses credited to your policy. This makes it easier to calculate total gains over the years and to prepare accurate tax documents.
3. If you’re nearing the 15‑year mark, consider increasing your premium to lock in the bonus for the full term, thereby maximizing tax exemption benefits.
4. Use the online portal to check your policy’s accumulated value in real time. LIC offers a mobile app that sends push notifications when a bonus is credited.
The 17.5 % bonus is more than just a headline; it translates into real financial growth for those holding eligible LIC plans. By understanding how the bonus is calculated, how it affects your policy’s maturity value, and what steps you can take to make the most of it, you can turn this record announcement into a tangible benefit for yourself and your family.
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