Life Insurance Corporation of India (LIC) has recently launched a new plan, the Money Back Plan-20 Years Plan (920), which is designed to provide financial security and savings for the policyholder over a period of 20 years. The policy offers regular payouts and bonuses at periodic intervals along with life cover. Let us take a closer look at the plan and its features.
LIC's New Money Back Plan-20 Years Plan - 920
Plan Features
The LIC Money Back Plan-20 Years Plan (920) is a non-linked, participating, limited premium payment policy that offers both survival benefits and death benefits. The plan comes with a policy term of 20 years, and the premium payment term is only for 15 years. The minimum sum assured for the policy is Rs.1 lakh, and there is no maximum limit.
Survival Benefits
The policy offers a survival benefit that is payable every five years. The policyholder will receive 20% of the sum assured at the end of the 5th, 10th, and 15th policy year. The remaining 40% of the sum assured will be paid at the end of the 20th policy year along with the accrued bonuses. This helps in providing liquidity and financial security to the policyholder at periodic intervals.
Death Benefits
In case of the unfortunate demise of the policyholder during the policy term, the death benefit will be paid to the nominee. The death benefit is equal to 125% of the sum assured, along with the accrued bonuses. This ensures that the family of the policyholder is financially secure in case of any eventuality.
Bonuses
The plan offers two types of bonuses: Simple Reversionary Bonus and Final Additional Bonus. The Simple Reversionary Bonus is declared every year and is payable along with the survival benefit or death benefit. The Final Additional Bonus is paid at the end of the policy term, along with the maturity benefit.
Tax Benefits
The premium paid towards the policy is eligible for tax benefits under Section 80C of the Income Tax Act, 1961. The maturity benefit and death benefit are also tax-free under Section 10(10D) of the Income Tax Act, 1961.
Premium Payment Options
The plan offers three premium payment options - monthly, quarterly, and annually. The premium payment amount will depend on the sum assured, the age of the policyholder, and the premium payment option chosen.
Policy Surrender
The policy can be surrendered after payment of premiums for at least three years. However, the surrender value payable will depend on the number of premiums paid and the duration of the policy.
Loan Facility
The policyholder can avail of a loan against the policy after payment of premiums for at least three years. The loan amount will be a percentage of the surrender value of the policy.
Policy Revival
In case the policy lapses due to non-payment of premiums, the policy can be revived within two years from the date of the first unpaid premium.
Riders
The policy offers two optional riders - LIC's Accidental Death and Disability Benefit Rider and LIC's New Term Assurance Rider. These riders provide additional coverage to the policyholder.
Eligibility Criteria
To be eligible for LIC's Money Back Plan-20 Years Plan (920), the policyholder must be between 13 and 50 years of age. The maximum age at maturity should not exceed 70 years.
Maturity Benefit
On completion of the policy term of 20 years, the policyholder will receive the remaining 40% of the sum assured along with the accrued bonuses as the maturity benefit.
Guaranteed Surrender Value
If the policy is surrendered after payment of premiums for at least three years, a guaranteed surrender value will be paid. The guaranteed surrender value is a percentage of the premiums paid, depending on the policy year in which the policy is surrendered.
Non-Forfeiture Benefits
In case the policyholder is unable to pay the premium after payment of premiums for at least three years, the policy will not lapse. Instead, it will acquire a paid-up value, which will be a reduced sum assured. The paid-up value will be payable on maturity or in case of the policyholder's demise.
Flexible Premium Payment Term
The plan offers a flexible premium payment term of 15 years. This means that the policyholder can choose to pay the premium for a period of 15 years, after which the policy will continue to remain in force for the remaining policy term of 20 years.
Policy Charges
The policy charges include premium allocation charges, policy administration charges, mortality charges, and service tax. These charges will be deducted from the premium paid by the policyholder.
Benefits of LIC Money Back Plan-20 Years Plan (920)
The plan offers the following benefits:
Financial Security: The policy provides financial security to the policyholder and their family in case of any eventuality.
Savings: The policy offers regular payouts along with bonuses, which help in creating savings for the policyholder.
Tax Benefits: The premium paid towards the policy is eligible for tax benefits under Section 80C, and the maturity benefit and death benefit are tax-free under Section 10(10D) of the Income Tax Act, 1961.
Liquidity: The policy offers liquidity to the policyholder at periodic intervals, which can be useful in case of any financial emergency.
Explain With A Simple Example
Suppose Mr. A, who is 30 years old, decides to invest in LIC's Money Back Plan-20 Years Plan (920) with a sum assured of Rs. 10 lakhs. He chooses a premium payment term of 15 years, with a premium of Rs. 50,000 per year.
In this scenario, Mr. A will receive regular payouts of 20% of the sum assured, i.e., Rs. 2 lakhs, every 5 years during the policy term. So, at the end of the 5th, 10th, and 15th policy year, he will receive Rs. 2 lakhs each.
In case of his unfortunate demise during the policy term, his nominee will receive the death benefit. Suppose Mr. A dies in the 12th policy year, then the death benefit will be the highest of the following:
Sum assured on death plus accrued bonuses: Rs. 10 lakhs + accrued bonuses
105% of all premiums paid as on the date of death: 105% of Rs. 7.5 lakhs (15 years' premiums) = Rs. 7.88 lakhs
Guaranteed sum assured on maturity: Rs. 4 lakhs (40% of the sum assured)
So, the death benefit in this case will be the highest of the three options, which will depend on the sum assured and bonuses accumulated till the 12th policy year.
In case Mr. A survives the policy term, he will receive the maturity benefit, which will be the remaining 40% of the sum assured, i.e., Rs. 4 lakhs, along with accrued bonuses.
Overall, LIC's Money Back Plan-20 Years Plan (920) provides a combination of life cover, regular payouts, and savings over a period of 20 years. It is important to carefully evaluate the plan's features, charges, and benefits before investing.
Conclusion
LIC's Money Back Plan-20 Years Plan (920) is a good option for those who want to create savings over a period of 20 years while also ensuring financial security for their family. The plan offers regular payouts and bonuses, along with tax benefits, which make it an attractive investment option. However, before investing, it is advisable to read the policy document carefully and understand the terms and conditions of the policy.
FAQ
Q: What is the minimum and maximum age for purchasing the policy?
A: The minimum age to purchase the policy is 13 years, and the maximum age is 50 years.
Q: What is the policy term for LIC's Money Back Plan-20 Years Plan (920)?
A: The policy term for this plan is 20 years.
Q: What is the premium payment term for the policy?
A: The premium payment term can be chosen by the policyholder and can be either 15 years or 20 years.
Q: What is the minimum and maximum sum assured for the policy?
A: The minimum sum assured for the policy is Rs. 1 lakh, and there is no maximum limit on the sum assured.
Q: Can the policyholder take a loan against the policy?
A: Yes, the policyholder can take a loan against the policy after it acquires a surrender value.
Q: What happens if the policyholder stops paying the premium?
A: If the policyholder stops paying the premium after paying at least three full years' premiums, the policy acquires a paid-up value. The paid-up value is a reduced sum assured and is payable on maturity or in case of the policyholder's demise.
Q: Can the policy be surrendered?
A: Yes, the policy can be surrendered after paying at least three full years' premiums. The surrender value will be the higher of the guaranteed surrender value or the special surrender value, which depends on the number of premiums paid and the duration of the policy.
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