LIC Money Back Plan 20 years

LIC Money Back Plan 20 Years- An Overview

The LIC Money Back Policy 20 Years is a life insurance plan offered by the Life Insurance Corporation of India that combines life insurance coverage with periodic money-back benefits. LIC 20-year plan is a traditional money-back plan with scheduled payments and a bonus facility.
However, the company withdrew the plan and launched a new version, the LIC New Money Back Plan 20 years.

LIC Money Back Policy Key Features

• It is a money-back plan that comes with a bonus option.

• Premiums need to be paid for 15 years only while the policy continues for 20 years.

• If the Life Insured is alive at the end of the 5th, 10th, and 15th years, 20% of the Basic Sum Assured is paid as Survival Benefit, and the policy continues.

• The remaining 40% of the Basic Sum Assured is paid on survival at the end of the policy tenure, along with the accrued bonuses.

• If the life insured dies within the policy tenure, the entire Sum Assured + accrued bonuses would be paid to the nominee as Death Benefit.

Eligibility Criteria of LIC Money Back Policy

Benefits of LIC Money Back Policy- 20 years

Below are the benefits one can avail of with their LIC Money Back Policy-20 years. Take a look:

• Survival Benefit: On survival, 20% of the Sum Assured is paid to the policyholder as Survival Benefit, and the policy continues:

  • Payable at the end of the 5th Policy Year

  • Payable at the end of the 10th Policy Year

  • Payable at the end of the 15th Policy Year

• Maturity Benefit: On survival till the end of the policy tenure, the remaining 40% of the Basic Sum Assured + accrued bonuses are paid to the policyholder as Maturity Benefit, and the policy terminates

• Policy Loan: The plan allows policyholders to take out loans against their policy, provided at least two years’ premiums have been fully paid. The maximum loans provided under the policy are:

  For in-force policies – up to 90% 

  For paid-up policies – up to 80%

• Death Benefit: If the Life Insured dies within the policy tenure, then the Sum Assured on Death + accrued bonuses would be payable to the nominee irrespective of the amounts paid earlier as survival benefit. Sum Assured on Death is defined as higher of:

  • 125% of the Basic Sum Assured as chosen at the policy inception or

  • 10 times of annualized premium as being paid

  • Subject to a minimum of 105% of the total premiums paid as on date of death

• Rider Benefit for Enhanced Protection:: Accidental Death and Disability Benefit Rider is a rider benefit that can be availed by paying an additional premium. In case of the accidental death of the life assured, a benefit up to the sum assured will be paid to the nominee. Moreover, in case of permanent disability due to an accident, an amount equal to the accident benefit sum assured will be given for 10 days. Subsequently, the future premiums of the policy will be waived.

• Availability of Bonuses:: The plan offers two types of bonuses. Firstly, the Simple Reversionary Bonus, determined based on the per thousand Sum Assured at the end of each policy year, provides guaranteed benefits. This bonus accumulates during the premium-paying term and is disbursed to the insured at the end of the policy term or as part of the death benefit, contingent upon the performance of the Life Insurance Corporation. Secondly, the Final Addition Bonus, paid out when the policy has been active for a minimum period upon death or maturity claims, providing an additional benefit to the policyholders.

How does the Money Back Policy work?

Let’s understand how a Money-Back Policy works with an example. The below illustration will show how beneficial a money-back policy can be.
Mr. Verma buys a Money-Back Policy with a sum assured of Rs.10 lakhs. He pays the premium regularly and has a 25-year tenure. The plan assures survival benefits of 20% of the basic sum assured after every 5 years of the policy tenure. Mr. Verma will also receive 20% of the sum assured with additional accrued bonuses on maturity.
Thus, Mr. Verma gets Rs.2 lakhs in the interval of every 5 years, i.e. 5th, 10th, 15th, and 20th year of the policy. At the end of the tenure, i.e. on the 20th year, Mr. Verma will receive Rs.8 lakhs. He will receive Rs.2 lakhs and the bonus on maturity, and the policy will cease. If Mr. Verma dies in the 18th policy year, his family will receive Rs. 10 lakhs along with the accrued bonuses.

Details About Premium of LIC Money Back Policy

The annual premium is mentioned in Rupees. Basic Premium is mentioned below (Tax not included)

Policy Details of LIC Money Back Policy-20 Years

• Grace Period: 30 days grace period is allowed for premium payment. The policy lapses if the policyholder fails to make payment within the grace period.

• Policy Termination or Surrender Benefit: The Policy lapses after the end of the Grace Period, but it can be revived within 2 years from the first unpaid premium due date. Surrender Benefit is available after premium payment of 3 full years’ according to a table.

• Free Look Period: If you are not happy with the coverage or terms and conditions of the policy, you can cancel the policy within 15 days of receipt of the policy documents, provided there has yet to be a claim.

What is Not Covered in LIC Money Back Policy?

In case of suicide committed within 12 months of policy inception, only 80% of premiums paid are returned to the nominee. In case of suicide within 12 months of revival, higher than 80% of premiums paid or acquired Surrender Value is paid.

Documents Required

The policyholder must fill up an ‘Application form/ proposal form’ with an accurate medical history, address proof, and other KYC documents may be required for Medical examination in some cases, based on the sum assured and the person's age.

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