LIC Returns & Alternative comparison
Analyze your LIC endowment policy cash flows, calculate the actual IRR/CAGR, and compare them directly against other standard investment vehicles.
1. Policy Parameters
Years
5 Years75 Years
₹
₹500₹500,000
Years
5 Years40 Years
₹
₹50,000₹10,000,000
/ ₹1,000
10 / ₹1,000100 / ₹1,000
/ ₹1,000
0 / ₹1,000500 / ₹1,000
%
4%20%
2. Return Comparison
Projected LIC Maturity Corpus
₹1,920,000
Sum Assured (₹1,000,000) + Bonuses (₹920,000)
Actual LIC Annual Return Rate (IRR / CAGR)
4.46%
The real compounded annualized yield Alternative Investment Growth (SIP/PPF)
₹4,599,287
Same payments compounded annually Opportunity Cost Evaluation
Investment Comparison Analysis
Your LIC policy returns an actual CAGR (IRR) of 4.46%, yielding a maturity of ₹19,20,000. If you invest the same premiums in an alternative growth investment (like mutual funds or PPF) at 12%, you would accumulate ₹45,99,287. This represents a net wealth difference (opportunity cost) of ₹26,79,287.
LIC vs Alternative Growth Curve
Year-by-Year Comparison Ledger
Start Period:
| Year | Age | Total Premiums | Projected LIC Value | Alternative Investment Value |
|---|---|---|---|---|
| 2026 | 31 | ₹60,000 | ₹96,000 | ₹63,832 |
| 2027 | 32 | ₹120,000 | ₹192,000 | ₹135,325 |
| 2028 | 33 | ₹180,000 | ₹288,000 | ₹215,396 |
| 2029 | 34 | ₹240,000 | ₹384,000 | ₹305,076 |
| 2030 | 35 | ₹300,000 | ₹480,000 | ₹405,518 |
| 2031 | 36 | ₹360,000 | ₹576,000 | ₹518,013 |
| 2032 | 37 | ₹420,000 | ₹672,000 | ₹644,007 |
| 2033 | 38 | ₹480,000 | ₹768,000 | ₹785,120 |
| 2034 | 39 | ₹540,000 | ₹864,000 | ₹943,167 |
| 2035 | 40 | ₹600,000 | ₹960,000 | ₹1,120,179 |
| 2036 | 41 | ₹660,000 | ₹1,056,000 | ₹1,318,433 |
| 2037 | 42 | ₹720,000 | ₹1,152,000 | ₹1,540,478 |
| 2038 | 43 | ₹780,000 | ₹1,248,000 | ₹1,789,168 |
| 2039 | 44 | ₹840,000 | ₹1,344,000 | ₹2,067,700 |
| 2040 | 45 | ₹900,000 | ₹1,440,000 | ₹2,379,657 |
| 2041 | 46 | ₹960,000 | ₹1,536,000 | ₹2,729,048 |
| 2042 | 47 | ₹1,020,000 | ₹1,632,000 | ₹3,120,367 |
| 2043 | 48 | ₹1,080,000 | ₹1,728,000 | ₹3,558,643 |
| 2044 | 49 | ₹1,140,000 | ₹1,824,000 | ₹4,049,513 |
| 2045 | 50 | ₹1,200,000 | ₹1,920,000 | ₹4,599,287 |
LIC Returns & Alternative Investment Comparison Guide
LIC endowment plans (like Jeevan Anand, Jeevan Labh, or traditional savings plans) combine life insurance cover with retirement savings. You pay premium installments for a selected term, and upon maturity, you receive the Sum Assured plus accrued Reversionary and Final Additional Bonuses. This calculator tracks the actual CAGR (IRR) of these policies and compares them directly against mutual fund SIPs or PPF.
Mathematical Formula
\text{LIC Maturity Corpus} = \text{Sum Assured} + (\text{Sum Assured} \times \frac{\text{Annual Bonus Rate}}{1000} \times \text{Term}) + (\text{Sum Assured} \times \frac{\text{FAB Rate}}{1000})
Formula Explanation:
- Sum Assured: The guaranteed cover amount paid to the policyholder upon maturity or to beneficiaries in the event of death.
- Reversionary Bonus: A simple interest bonus declared annually per ₹1,000 of Sum Assured. It is added linearly and does not compound over the policy years.
- Final Additional Bonus (FAB): A one-time terminal bonus paid at maturity for policies with longer terms (typically 15 years or more).
Terms & Abbreviations
LIC Life Insurance Corporation of India - provider of endowment, money-back, and savings plans.
IRR / CAGR Internal Rate of Return / Compound Annual Growth Rate - the true annualized yield on your premium payments.
Sum Assured The face value guarantee paid upon policy maturity or death.
Opportunity Cost The net wealth sacrificed by choosing low-yield insurance savings over high-yield compounding alternatives like Mutual Funds.
Frequently Asked Questions
LIC traditional policies are conservative debt-oriented schemes. While they offer safe, guaranteed returns, their actual CAGR (IRR) is historically low, ranging between 4% to 6%. This is because a portion of your premium is diverted to fund life coverage and administrative fees/commissions, leaving less money to compound.
Our calculator maps all premium cash outflows and compares the final LIC maturity corpus against a wealth accumulation model (like a mutual fund SIP or a PPF account). It assumes you invest the exact same premium amount in an asset compounding at your chosen alternative rate (e.g. 12%), showing the exact opportunity cost.
The Reversionary Bonus is a simple interest bonus declared annually based on LIC's valuation profits and accumulates linearly. The Final Additional Bonus (FAB) is a terminal, one-time bonus added at maturity to reward long-term policyholders (typically active for 15+ years).
Endowment policies do not declare a compound interest rate. To find the real rate of return, we list all premium payments as cash outflows on a timeline, match them to the final maturity payout, and solve for the Internal Rate of Return (IRR). This represents the compound interest rate needed to match the payout.
This is a widely recommended alternative. Instead of paying high premiums for a low-yield traditional endowment policy, you buy a cheap Term Insurance plan (for high life cover) and invest the remaining money in Equity Mutual Funds (SIPs), Public Provident Fund (PPF), or NPS to build a much larger wealth corpus.
Yes, you can surrender a policy after paying premiums for a minimum of 2 consecutive years. However, the surrender value is typically much lower than the total premiums paid, resulting in a loss. Using this calculator helps you decide if surrendering and reinvesting in mutual funds is financially viable in the long run.