Searching for a dependable method to get regular cash payouts along with protection? With the help of LIC’s New Money Back (Plan 720) – (20 Years) Premium and Maturity Calculator, you can determine whether this plan aligns with your long-term objectives and estimate what you might receive and pay. To help you make an informed decision, we’ve included a thorough explanation of this 20-year money-back policy’s benefits, workings, sample illustrations, frequently asked questions, and expert opinions below.
LIC New Money Back (Plan 720) – (20 Years)
Plan No. 720 (UIN: 512N280V03)
Why Consider LIC’s New Money Back Plan (20 Years)?
LIC offers this limited premium, non-linked, participating life insurance savings plan. It provides a combination of survival benefits (recurring payouts), maturity benefits, and life insurance (in the event of death).
Key Highlights & Benefits
| Feature | What It Means |
|---|---|
| Death Benefit | The higher of 125% of the Basic Sum Assured or 7× the annualised premium, plus vested bonuses, is paid out if the insured passes away during the policy’s term (while it is still in effect). Additionally, at least 105% of the entire amount of premiums paid thus far. |
| Survival Benefits | You will always receive 20% of Basic Sum Assured if you live through years 5, 10, and 15. |
| Maturity Benefit | You get 40% of the Basic Sum Assured plus vested bonuses plus the last extra bonus (if declared) if you live for 20 years. |
| Participation in Profits | Through Simple Reversionary Bonuses and a Final Additional Bonus (if declared), the policy receives a portion of LIC’s profits. |
| Liquidity / Loans | After paying for at least two complete years’ worth of premiums, you are eligible to take out a policy loan. up to 90% of surrender value for policies that are currently in effect and up to 80% for paid-up policies. |
| Flexibility (Settlement Options, Riders) | Instead of a lump sum payment, you can opt to receive maturity or death benefits in installments over five, ten, or fifteen years. The following riders are also available: critical illness, term assurance, accident benefit, and accidental death/disability. |
| Surrender & Paid Up | You will receive the higher of the Special Surrender Value or Guaranteed Surrender Value if you give up after two years. The policy becomes paid-up (less benefits) if premiums are stopped after at least two years. |
Eligibility & Basic Parameters
- Entry age: 13 to 50 years (nearest birthday)
- Maturity age: up to 70 years
- Policy term: 20 years
- Premium paying term: 15 years
- Basic Sum Assured (BSA): minimum ₹100,000, in multiples of ₹5,000
- Premium modes: yearly, half-yearly, quarterly, monthly (via NACH / salary deduction)
- Grace period: 30 days (yearly/half/quarter) or 15 days (monthly)
- Revival: Discontinued policy can be revived within 5 years, subject to conditions and interest.
Sample Premium Illustration
For a Basic Sum Assured of ₹100,000 (standard lives, exclusive of taxes), the annual premiums are:
- Age 20: ₹7,644
- Age 30: ₹7,752
- Age 40: ₹8,129
- Age 50: ₹9,021
Rebates:
- Yearly mode: 2% rebate on tabular premium
- Half-yearly: 1% rebate
- Quarterly, monthly: no rebate
- High Sum Assured rebate: For BSA ₹2,00,000 to ₹4,95,000, 2‰ (per mille) rebate; ₹5,00,000+ gives 3‰ rebate.
Real-World / Hypothetical Illustration & Analysis
To put this into perspective, let’s say you are thirty years old and have a ₹200,000 Basic Sum Assured (BSA). (The actual bonus or non-guaranteed returns will be contingent on LIC’s future performance; these figures are merely indicative.)
- Premium (approx): If BSA ₹100,000 costs ₹7,752 per year, for ₹200,000 it would roughly double (subject to rebates).
- Survival benefits: You’d receive 20% × ₹200,000 = ₹40,000 at end of years 5, 10, 15.
- At maturity (year 20): you receive 40% × ₹200,000 = ₹80,000, plus bonuses.
- Death benefit: In the event of a death during the term, the benefit would consist of vested bonuses plus the higher of 125% of BSA (i.e., ₹2,50,000) or 7× annual premium, whichever is higher.
Your maturity payout may be much higher than the guaranteed amounts if bonuses add, say, 5% a year (assumed). However, keep in mind that non-guaranteed bonuses are contingent on LIC’s performance and cannot be assured.
According to LIC’s own brochure illustration, the assumed investment return scenarios are 4% and 8% annually. These illustrate the potential range of non-guaranteed benefits. However, downside certainty is provided by the guaranteed minima (survival/maturity).
Analysis / Takeaway:
- The plan is appropriate for those who desire both periodic liquidity (at years 5, 10, and 15) and life insurance.
- This front-loading helps because benefits last for 20 years, but premiums are only paid for the first 15 years.
- Returns are partially reliant on LIC’s surplus and bonus announcements rather than market volatility due to its non-linked nature (unlike ULIPs).
- The real upside is in bonus performance; if your goal is only guaranteed returns, these guarantees are not very strong.
- This is a good option for people who want a product that combines life insurance, periodic payouts, and safety.
FAQs (Frequently Asked Questions)
Section 80C may allow for a deduction for premiums paid (subject to prevailing tax laws). Under Section 10(10D), the benefits (maturity/death) might also be exempt from taxes, subject to certain restrictions. (Ask a tax advisor.)
You have a grace period of 15 days for monthly payments and 30 days for annual, half-yearly, and quarterly payments. The policy is still in effect during the grace period. The policy expires if you don’t make your payments on time, but you can renew it within five years (with arrears, interest, and underwriting).
Yes, as long as the premiums for the previous two full years have been paid. The higher of the Special Surrender Value or the Guaranteed Surrender Value will be given to you.
The policy becomes “paid-up” if you cease making premium payments after at least two years. It remains in effect but with fewer benefits: you are no longer eligible for future bonuses, and your maturity and Sum Assured benefits are lowered proportionately.
Yes — the benefits (including vested bonuses) are computed and then distributed per your option (lump sum or installments).
Only certain parts (like survival / maturity fractions) are guaranteed. The bonus (reversionary & final additional) is not guaranteed and depends on LIC’s experience.
For individuals aged 13 to 50 who want life cover + periodic liquidity + long-term savings, and are comfortable with moderate bonus risk.
Yes — once at least 2 years’ premiums are paid, you can borrow up to 90% of surrender value (for in-force policy) or 80% (for paid-up).
The main exclusion is suicide within 12 months from policy commencement or revival. Then only 80% of total premiums paid or surrender value (whichever is higher) is paid.
Expert Perspectives & Opinions
“In product designs like LIC’s new money back plan, the combination of periodic liquidity and life cover can appeal strongly to disciplined investors who do not want to time markets.”
— Dr. A. Kumar, Actuarial Consultant (hypothetical quote)
Plans with guaranteed survival payouts are psychologically appealing to many financial planners because they help enforce discipline, lessen temptation to withdraw, and offset other needs. However, some warn that one shouldn’t rely only on non-guaranteed portions because bonus assumptions might not always be fulfilled.
Although bonus amounts vary based on LIC’s investment performance, claims history, and future regulations, the company has historically maintained a track record of consistently declaring bonuses on participating plans, according to public data.
Before making a commitment, it’s a good idea to use your own premium and maturity calculator (with conservative assumptions) and compare it to other options (such as PPFs, mutual funds, and ULIPs) based on your tolerance for risk.