# How to calculate maturity value of LIC policies

A Maturity value is the amount that is to be paid to the place holder of a financial obligation when obligation reaches its maturity. When there is a existence of bond, the maturity value would be the principal amount of the bond. This amount should be paid by the issuer to the owner at the time of maturity.

Maturity is the term that refers to the time length between the date of issue of fixed term debt security and date until it is redeemed. In case of bonds and the other types of debt securities, the maturity value is called as par or face value. Here the most important thing is the certificate of deposit. In this case, the earned interest is added upon to the principal of the certificate of deposit. This is the time, at which the maturity value is to be calculated.
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The steps to calculate the maturity valued are as follows.'''
# At first the periodic rate, which is the amount of interest that is added to compounding interval, is calculated. When this interest gets accumulated on the debt security, it is added to the periodic intervals. The periodic rate is calculated by dividing the annual interest rate by the number of times the interest is calculated and added each year.
# Calculate the interest added for the first time interval by multiplying the periodic interest with the starting value of debt security.
# Then the interest is added to value of debt security in order to find the end value for the period.
# Use the formula V=P x (1+r) ^ n to calculate the maturity value. Here V -> maturity value, P -> principal value, n -> no. of compounding intervals.

You can also get guidance from the agents.