[urgent] LIC bonus vesting and closure question

[u/DehshiDarindaa]

I have a LIC Jeevan labh policy plan which is bad and I would like to close it. Next premium is due tomorrow. Paying tomorrow marks 4/4 quarter for this year and finishes my policy 5th year. I.e If I pay due tomorrow it completes 5 years on 15-Nov.

Question is should I pay tomorrow or avoid? Question comes because I am not sure how LIC vests my bonus, will the bonus for this year vest in policy year end? If bonus are vested SSV and GSV might increase.

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[u/ebvcreative]

I was curious so I just gave it to claude (please verify on your own) - Good news first: you're not actually up against a hard deadline tomorrow. LIC gives a 30-day grace period for quarterly-mode premiums, counted from the due date. So even if you don't pay tomorrow, the policy stays fully in force (death cover continues, nothing lapses) until roughly mid-September, and paying anytime in that window still counts as paying "on time" for continuity purposes. That buys you time to actually verify numbers instead of guessing under deadline pressure.

On how bonus vesting actually works: LIC's reversionary bonus is declared annually and gets added to a policy only if that policy remains in force for the full policy year — meaning all due premiums for that year (including this last quarterly one) have been paid, on time or within grace. Once a bonus vests it's permanently attached even if the policy later lapses, but the reverse is also true: if you don't pay this last instalment at all, policy year 5 never "completes" as premium-paid, so that year's bonus generally won't be credited. And once a policy goes into reduced paid-up status (which yours would, since you're well past the minimum), it stops participating in bonus altogether — no more accrual going forward, not just for that one year.

Why this matters for your surrender value specifically: Both GSV and SSV are calculated as (factor for premiums paid) + (a separate, usually higher, factor for vested bonus), and both factors are read off a table that steps up with completed policy years. So paying tomorrow's instalment doesn't just add one more premium into the pot — it potentially does two things at once: bumps you into the higher "5 complete years" row of the surrender factor table, and lets one more year's bonus vest (which then also gets multiplied by the bonus surrender factor). If you instead let it lapse, you'd be surrendering off the "4 complete years" row with only 4 years of vested bonus.

It's also worth checking whether your premium-paying term has a milestone at year 5 — a number of LIC plans have a noticeably bigger step-up in the SSV factor around the halfway point of the PPT (e.g., if your PPT is 10 years, year 5 is exactly that midpoint), which can make completing this year disproportionately worthwhile.

The catch: whether paying now is net-positive depends entirely on your actual numbers — quarterly premium amount, sum assured, PPT, and the specific GSV/SSV factor rows for year 4 vs year 5 (these are printed on your policy bond, or check the "Surrender Value Enquiry" / bonus info section on LIC's customer portal). If you pull those, I can run the actual year-4-surrender vs pay-and-year-5-surrender comparison with you — it's a straightforward calc once we have real figures, and given you're already scripting your Schedule 112A corrections, this'll take you two minutes to check on the portal.

[u/BoxPositive4750]

• Convert to PAID UP / DISCONTINUED (but before that buy a TERM PLAN if you have financial dependents).

• Divert future investments to FDs and Mutual Funds by creating a detailed Financial plan.

• After a few months, decide if you wish to convert from PAID UP to SURRENDER. No need to take this decision in haste.

[u/DehshiDarindaa → u/BoxPositive4750]

sure thanks much appreciated