What is the LIC Return Calculator?
The LIC Return Calculator helps you measure the performance of any LIC policy or investment in two ways:
- Absolute Return — the total gain (or loss) in rupees.
- CAGR (Compound Annual Growth Rate) — the annualized return, which lets you compare LIC returns with other investment options like FDs, mutual funds, PPF, etc.
How is CAGR Calculated?
CAGR is calculated using the formula:
CAGR = [(Final Value / Initial Value)^(1/n) − 1] × 100
Where n is the number of years.
Example: LIC Plan Returns
Suppose you paid ₹70,000 per year for 20 years (total invested = ₹14,00,000) and received a maturity benefit of ₹30,00,000.
- Absolute Return = ₹30,00,000 − ₹14,00,000 = ₹16,00,000
- CAGR = [(30,00,000 / 14,00,000)^(1/20) − 1] × 100 ≈ 3.88% p.a.
This is a typical real-world return for traditional LIC endowment plans — generally below FD rates when adjusted for inflation and tax. CAGR is the right number to compare with other investments.
Why CAGR Matters
- Apples-to-apples comparison — compare a 20-year LIC plan with a 5-year FD or 10-year mutual fund.
- Time-adjusted — accounts for the fact that ₹1 lakh over 10 years is different from ₹1 lakh over 20 years.
- Compounding effect — shows the real annual growth, including the power of compounding.
What is a Good CAGR for LIC Plans?
| Plan Type | Indicative CAGR (recent years) | Comparison |
|---|
| LIC Endowment Plans (714, 715, 736, etc.) | ~3.5% to 4.5% | Below FD rates (5-7%) |
| LIC Money Back Plans (720, 721) | ~3% to 4% | Below FD rates |
| LIC Single Premium Plans (883) | ~4.5% to 5.5% | Comparable to long-term FDs |
| LIC ULIPs (e.g. Index Plus) | ~6% to 10% | Comparable to equity mutual funds (with market risk) |
| LIC Mutual Fund SIPs (long-term) | ~10% to 14% | Higher, with market risk |
Note: The returns from traditional LIC plans are guaranteed and tax-free (under Section 10(10D)), which adds real value even if the headline CAGR looks low. Compare on a post-tax basis with FD returns to get the true picture.
Frequently Asked Questions
What is the difference between absolute return and CAGR?
Absolute return is the total gain in percentage terms over the entire holding period. CAGR is the annualized rate that, if compounded each year, would give the same final value. CAGR is much more useful for comparing investments of different durations.
How can I find the current value of my LIC policy?
For traditional endowment plans, the current value is the sum of premiums paid + accrued bonus + surrender value (if eligible). For ULIPs, check the latest NAV on LIC's website or customer portal.
Are LIC returns guaranteed?
For traditional endowment and money-back plans, the Sum Assured is guaranteed. The bonus rate is declared annually and can change, so total returns are not "guaranteed" in absolute terms. For ULIPs and LIC MF schemes, returns are market-linked and not guaranteed.
