rate-of-interest

LIC's rate of interest for various financial transaction for FY 2016-17

Life Insurance Corporation of India (LIC) every year declares the rate of interest to charged on the various financial transaction in the coming financial year. These financial transactions include policy loan, revival, backdating of policy and many other transactions. The rate of interest in these financial transactions are declared by the actuarial department of LIC.

Rate of Interest for the various financial transaction for FY 2016-17

S No. Type of Transaction Rate of Interest
1 (i) Policy Loans [under all plans except Jeevan Aastha (Plan 195), Jeevan Vridhhi (Plan 808), Jeevan Vaibhav (Plan 809), Jeevan Sugam (Plan 813), Jeevan Shagun (Plan 826), Jeevan Sangam (Plan 831) and Jeevan Shikhar (Plan 837)] 10.00%
1 (ii) Policy Loans under Jeevan Aastha (Plan 195), Jeevan Vridhhi (Plan 808), Jeevan Vaibhav (Plan 809), Jeevan Sugam (Plan 813), Jeevan Shagun (Plan 826), Jeevan Sangam (Plan 831) and Jeevan Shikhar (Plan 837) 10.50%
2(i) For policy issued on or after 01/01/1987, arrear of premiums with in six month from the date of FUP 9.50% (subject to minimum int. of Rs. 5)
2(ii) For policy issued on or after 01/01/1987, for revival 9.50% (subject to minimum int. of Rs. 5)
3 Arrear of premiums for alterations and age proving higher 9.50%
4 Dating back the policies 9.50%
5(i) Discount factor for commutation of instalments under Education Annuity policies. 9.50%
5(ii)  Discount factor for commutation of Income Benefits under Multi-purpose, Guaranteed Benefits under Annuity Policies. 9.50%
5(iii) Discount factor for unpaid instalments under settlement option 9.50%
6 Settlement options for Maturity Claims 6.00%
7(i) Advance payment of premiums under Jeevan Sneha (Plan 128) 10.00%
7(ii) Advance payment of premiums under Jeevan Bharati (Plan 160) and Jeevan Bharati I (Plan 192) 6.00%
8 Delayed payment of claims 9.00%
9 Discounted value of Accumulated Vale for calculation of SSV under Jeevan Saral (Plan 165) 7.50%
10 Accumulation of Survival Benefit (SB) under Jeevan Bharati (Plan 160) and Jeevan Bharati-I (Plan 192) 4.00%
11 Discounting of claims during the last year of policy term 9.00%
12 Reinstatement of surrendered policies 10.50%

These rates will be effective from 01/04/2016 to 31/03/2017. All the rate of Interest mentioned above will also be applicable on all the plans launched after 01/01/2014.

5 thoughts to “LIC's rate of interest for various financial transaction for FY 2016-17”

  1. Dear Pawan Kumar,
    Please help me decide if I should surrender my policy now, next year or after 10 years of completion, below are the details:
    Jeevan Saral
    Date of Commencement: 28/4/2012
    Age when admitted: 35
    Half yearly premium: 36390
    Policy term: 35
    Sum Assured: 15,00,000
    First Premium Paid on 28/4/2012
    Most recent premium paid on 28/4/2016
    What amount will I get if I surrender now?
    What amount if I surrender after 1 year (paying 2 more premiums)?
    What amount if I surrender after 10 years?
    Appreciate a quick response, also please let me know if you need more details.
    Regards,
    Vijay S

    1. Age at entry 35, monthly premium Rs. 6000
      MSA for 4-year term is Rs. 215700, on surrender between 4 to 5 yrs you will get 90% of MSA only (No LA) as per the policy condition.
      for 5 yr term MSA is Rs. 279900, which will be paid as surrender value but no loyalty addition
      for 10 yr term MSA is Rs. 650400, which will be paid as surrender value with Loyalty addition (LA) after 10 years.
      Exact surrender value may be different according to date of surrender from FUP due to discounting/accumulation factor

  2. Dear Pawan Kumarji,
    Thanks a lot for the great job you are doing.I would like to know about Special Revival. Pls illustrate with examples. Thanks.

  3. Dear Sir,
    With due respects and humble submissions, I beg to state that I am a Development Officer working in a rural area called Bongaigaon Division in Eastern Zone of Assam and Western Meghalaya since 1999.
    Sir, I would like to know about Maturity Settlement Options of Maturity Claims. I use this as a Marketing tool and have very successfully used this to grow my business manifold. But Sir, the circular in this regard that I possess is that of 2005. Therefore, the Rates of Settlement option payable per Rs 1000 Maturity Sum Assured is different. I even fail to calculate the settlement options manually to reach the exact figures. However, Sir, I do have the software utility of Maturity settlement option developed by you. Sri Mana Valan, Development officer, Chennai , sent it to me on request and that has proved extremely beneficial.
    I shall be highly obliged if you can send me the latest LIC circular in this regard and method to calculate Maturity settlement options manually at the present declared rate of 6 %. I shall also be pleased if you can send me the Latest Rates of Settlement Option payable per Rs 1000 maturity Sum Assured payable Yearly or Half Yearly for 2 to 10 years.
    My email address is [email protected] . I shall be extremely happy to hear from you. Here’s hoping that you will respond after receiving mine. Have a blessed day Sir.
    Thanking you and expecting responses,
    Yours authentically,
    Mr. Joy deep Choudhury
    Development Officer

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