How do you calculate loyalty addition in lic?

Answer 1

There are differences between bonus and loyalty additions. These two should not be confused with each other. In most of the cases the loyalty addition will be declared for the policy holder based on the period for which he has paid the premium amount even in the case of death. The policy holder should have paid the premium for a minimum specified period to become eligible for the loyalty addition. But this is not the situation with bonus calculation. However the mathematical calculations are same for both the bonus and loyalty additions. The most important point here is that the loyalty addition will be given to the policy holder based on the experience of the company with the policy holder. For some insurances both the bonus amount as well as the loyalty additions are given to the policy holder.

For example if a proposer takes a policy for an amount of rupees 500000 for 20 years and if the loyalty addition is given at a rate of rupees 40 per 1000 sum assured then the total loyalty addition he would get will be 20 x 500 x 40 = 400000. And the total amount along with the maturity amount will be 500000 + 400000 = 900000 /-. This is one of the examples of calculating loyalty addition.