LIC has 2 kinds of plans - 'with profit' and 'without profit'.

Now, when LIC makes profit in a year, it gives a portion of it to those policyholders who hold 'plans with profit'. This profit starts getting accumulated from the first year of the commencement of the policy and is paid to the policyholder on maturity of death. In case, the lic policy is surrendered by the policyholder after the stipulated time period, the vesting bonus will be added to the paid up value.