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
₹
₹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 CAGR (IRR)
4.46%
The real compounded annualized yield Alt Investment Value
₹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 |
Understanding LIC & Insurance Endowment Returns
Endowment insurance plans (like those from LIC) merge life cover with 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 plans and compares it against alternative investments (like Mutual Fund SIPs or PPF).
Mathematical Formula
\text{Maturity Value} = \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 minimum payout in case of maturity or death.
- Reversionary Bonus: A simple annual bonus declared per ₹1,000 of Sum Assured. It is added linearly (no compounding interest is earned over the term).
- Final Additional Bonus (FAB): A one-time terminal bonus added to the maturity value for policies of longer terms.
Terms & Abbreviations
LIC Life Insurance Corporation of India - primary provider of endowment plans.
CAGR/IRR Compound Annual Growth Rate / Internal Rate of Return - the actual compound rate your investment yields.
Sum Assured The face value guarantee paid upon death or maturity.
Opportunity Cost The return difference lost by choosing a low-yield scheme over a higher-yielding investment alternative.
Frequently Asked Questions
Endowment policies are conservative, debt-oriented portfolios. Additionally, a significant portion of your premium is diverted to fund life insurance coverage and administrative expenses (like high agent commissions) rather than earning investment yields.
This is a simple interest bonus declared annually by the insurer (around September) based on valuation profits. It is declared as a specific rate per ₹1,000 of Sum Assured (e.g. ₹45 per ₹1,000). Because it is simple interest, it is calculated only on the Sum Assured and does not compound over the policy years.
Your Sum Assured is the face value cover of your policy, which is printed on the first page of your LIC Policy Bond. Annual bonus rates can be checked on the official LIC website or through agent portals under the "Valuation Bonus Rates" section.
The Policy Term is the total number of years the life insurance coverage remains active until maturity. The Premium Paying Term (PPT) is the specific number of years you are required to pay premiums, which can be shorter than the overall policy term.
We map all the regular premium outflows and the single maturity payout onto a timeline. We then solve for the interest rate that equates the present value of outflows to the maturity value. This is the exact internal rate of return you earn.
Opportunity cost represents the extra wealth you would accumulate if you invested the same premium amounts in a higher-yielding asset (like a mutual fund SIP or a PPF account) while purchasing a cheap Term Insurance plan for life coverage.