LIC Money Back Plan 20 Years

The Money Back Plan 20 years is LIC's new non-linked participating policy. It provides protection against the death of the policyholder as well as provides periodic payment on survival during the policy term at specific periods. As a term of the policy, 20% of the Sum Assured is paid as survival benefit in the end of the 5th, 10th & 15th policy year. Additionally, a reversionary bonus is payable at maturity. Furthermore, this policy provides the accidental death rider and the disability benefit rider. The policyholders can also apply for loans against the policy. If the policyholder wishes to surrender the policy, they have to wait for 3 years and pay the premiums for the period until it accrues the cash value. In case the policyholders stop paying the premiums, the policy gets terminated. If the premiums are paid for a minimum of three years, a paid-up value is accrued for the reduced sum assured. However, it restricts the policyholder from availing of additions in the future.

Key Features and Highlights

Death benefit: In case the policyholder expires during the policy term, the nominee or beneficiary receives 10 times of the annualized premium or 125% of the Sum Assured, along with the final additional bonus and the simple reversionary bonuses. Moreover, the periodical survival benefits that have been paid are not deducted.

Survival Benefits: In case the policyholder survives the policy term,  20% of the Basic Sum Assured is paid out as money back at the end of the 5th, 10th & 15th policy year. Moreover, 40% of the Sum Assured accrues as bonuses additionally.

Maturity Benefit: If the policyholder survives till maturity, he/she receives 40% of the Basic Sum Assured along with simple reversionary bonuses and the final additional bonus.

Benefits of the Policy

• Add-on Riders: LIC’s Accidental Death Rider or the Disability Benefit Rider can be purchased with this policy after paying an additional premium, provided that the policy is active on the day of the accident. For accidental deaths, the Accident Benefit Sum Assured as well as the death benefit is paid to the nominee/beneficiary. For accidental permanent disability, an amount equal to the Accident Benefit Sum Assured is paid to the policyholder over a period of ten years. Subsequently, all future premiums for the Accident Benefit Sum Assured are waived.

• Simple Reversionary Bonus: It is a bonus declared per thousand of the Sum Assured at the end of each year. After that, they become part of the guaranteed benefits. Therefore, this bonus accrues during the premium paying term. However, it is paid at the end of the policy term or death. It is paid in addition to the final additional bonus. The amount of Simple Reversionary Bonuses is determined by the performance of the Life Insurance Corporation.

• Final Additional Bonus: This bonus is paid if the policy runs for a minimum period. This may be declared when a claim is made due to death or maturity, provided that the policy has been active for a specified minimum term.

Features of the Policy

• Minimum Basic Sum Assured: Rs. 1,00,000

• Maximum Basic Sum Assured: No limit set

• Premium paying term: 15 years

• Maximum Maturity Age for Policyholder/Life Assured: 70 years

• Minimum Age: 13 years

• Maximum Age: 50 years

• Policy Term: 20 years

An Example

Rahul Dubey, a 30-year-old man opts for LIC Money back plan – 20 years. The sum assured is Rs. 4,00,000 and Rahul pays an annual premium of approximately Rs. 30,000 for 15 years. If Rahul dies from an accident, then his nominee is entitled to get 125% of the Sum assured along with additional accidental Sum assured as well as all the accrued bonuses. Moreover, any survival benefit that has been already paid is not deducted. If Rahul survives till the maturity, he receives 20% of the Sum Assured, i.e., Rs. 80,000 at the end of the 5th, 10th and 15th years. At the end of 20 years, Rahul receives Rs. 1,60,000 in addition to all accrued bonuses.

The survival benefits under the LIC money back policy are paid periodically. The premiums for this money back policy can be paid on a yearly, half-yearly, quarterly or monthly basis. Moreover, policyholders can get double tax benefit under sections 80-C and 10-D of the Income Tax Act. The large Sum Assured in addition to several additional benefits, like accidental death rider and disability benefit rider, ensures that Rahul’s family is not in severe crisis in the event of his untimely death or disability.

Exclusions

In case the policyholder expires during the course of the policy, the insurer (LIC) will not accept any further claims after that except 80% of the total premiums paid (excluding taxes, rider premiums, extra premiums, etc.) from the exact date of risk commencement. If the policyholder/life insured expires from the revival date, 80% of the total premiums paid till the date or the surrender value will be paid out.

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