What Is Money Back Policy?
Money Bank Policy is one of the most popular forms of life insurance policy that involves the traditional way of savings-related insurance plan that allows liquidity of cash for you. Other life insurance plans pay the insured at the time of death of the insured and it goes to the family of the insured. In money back policy the insured gets regular pay-outs while on the policy tenure as survival benefits to the insured himself.
How Does A Money Back Policy Operate?
Money-back policies give payments in different intervals and this makes it more different and promising than any other life insurance policies available in India. The pay-outs are calculated as a percentage of the Sum Assured offered in the plan purchased. It is very important to notice that pay-outs are made only if the insured is alive during the active policy tenure.
The policy gives regular pay-outs as mentioned before but in case the insured dies during the policy tenure, the whole Sum Assured is paid to the family even if the survival benefits are already paid before the death. This is referred to as maturity benefits.
What Are The Benefits Of The Money Back Policy?
There are some unique features of a money-back policy that in turn make it stand out from the other types of life insurance plans.
Let us look at what all they are:
- Periodic benefits or Survival Benefits – It is the most salient feature of the money-back policy. These benefits are paid to the insured only if he is alive during the tenure of the insurance policy that is why it is termed as “Survival” benefits.
- The easy way of pay-outs – Survival benefits are usually paid as monthly incomes for the insured which makes the life of the insured much easier. However, some plans pay the survival benefits as a lump sum amount too.
- Availability of Bonuses – money back plans usually offer bonuses too in the form of a simple bonus or compound bonus that will be paid on maturity of the policy or death of the policyholder. This makes the plan more promising to an individual
- Add-ons or Riders – Rider options are also available in money-back insurance plans with the payment of an additional premium.
- Tax benefits – premiums paid under the money-back plans are also eligible for tax benefits under Section 80C. The maturity benefit or death benefit received by the insured is also paid to them tax-free.
- Payment of premiums made easy – the premiums can be paid regularly for a particular period or all at once any type of payment is possible.
How Does A Money Back Policy Differ From A Normal Life Insurance Policy?
Money back policies are generally categorized under life insurance plans themselves. However, still, they have their unique features which are useful for people looking for a monthly income along with insurance cover.
The major differences between money-back policies and other life insurance policies are mentioned below.
| Normal Life Insurance Plans | Money Back Insurance Plans |
| There are no survival benefits paid during the policy tenure. Only death benefit is given. | Survival benefits are guaranteed during the tenure of the policy while the policyholder is still alive. |
| If any kind of benefit or bonus is paid during the tenure of the policy the amount will be deducted from the death benefit when it is time to pay the insured’s nominee. | Guaranteed Sum Assured is paid in full even if the payment is made on money back plans during the tenure of the policy. |
| Bonus facilities may be absent sometimes. | Bonuses are always added in most of the plans. |
| No regular flow of cash in the policy | Regular flow of income is the major attraction of the money back plan. |
The Money Back policies in general involve very low risk and are proven to be most useful while tackling a sudden financial crisis.
What Is LIC Money Back Policy?
Money back policy offered by LIC (Life Insurance Corporation of India) is the best one available in India and is considered by the majority of the population. The plan is available for 20 years in which 20% of the Sum Assured is paid as the survival benefit during the end of 5 years, 10 years, and 15 years.
Some of the salient features of Money back policy LIC are mentioned below:
- It provides an accidental death benefit and disability benefits for riders or add-ons.
- Insured can get a loan facility from this policy
- A reversionary bonus is given to the insured on the maturity of the policy.
- Death benefits are 10 times the annual premium or 125% of the Basic Sum Assured.
- Upon experiencing profits from the corporation, the policyholder will be eligible to receive reversionary bonuses based on the experience of the corporation.
- If the insured services till maturity of the policy then 40% of the Basic Sum Assured is paid to him in addition to other payable bonuses.
- There is a provision of Final Additional Bonus when a claim is made as a result of the death of the insured or if the policy has attained maturity, but only if the policy has survived the minimum term of 5 years.
What is LIC Money Back Policy Calculator
The LIC New Money Back 20 years plan maturity can be calculated based on the Survival Benefits, Year Wise Life Cover, Surrender Value Of Policy, Sum Assured, Age, And Term of the policy. This is usually done to compare and calculate different types of money-back plans available and choose the best one for you. The calculation can be done online within the comfort of your own home. It displays the GST rates too separately.
This Money Back 20 Years Plan (920) requires
- The premium to be paid for 15 years and the maturity happens at the full end of 20 years.
- The policy usually provides three money back that is equal to 20% of the Sum Assured on the completion of either 5th or 10 or 20th year or at full maturity of 20 years.
- At that time 40% of the Sum Assured + Bonus + Financial Additional Bonus (FAB) is provided as the maturity amount.
The money back and maturity details are given year-wise below:
| Maturity Years In Each Stage of the 20 year Money Back Policy LIC | Money Back Details |
| 5th Year end of the Policy | 20% of the Basic Sum Assured |
| 10th Year end of the Policy | 20% of the Basic Sum Assured |
| 15th Year end of the Policy | 20% of the Basic Sum Assured |
| Final Maturity ending at the 20th year of the Policy | 40% of the Basic Sum Assured+Bonus+FAB (Financial Additional Bonus) |
Apart from these benefits, there are also,
- Death Benefits in the Life Cover and it is 125% of Basic Sum Assured with Simple Reversionary Bonus till the time of death and FAB if any.
- One important thing to note about the policy offered by LIC is once the premium of the first two years of the policy is paid, it becomes eligible for the GSV (Guaranteed Surrender Value) and that is equal to a part of the total premium paid + part of total accumulated Bonus.
Did you know about Children’s Money Back Policy LIC?
Children as we know are considered to be the future of every country and it is very important to give them financial security to make them achieve their dreams. LIC New Children’s Money Back Policy in India is specially designed to meet the requirements and needs of the dependent growing children through the survival benefits that are provided by the insurer.
The requirements such as studying abroad, educational needs, marriage, etc are all supposed to be met through this policy. The plan usually is brought by the grandparents or parents of the child who are aged between 0-12 years of age and helps to secure the future of the child.
Financial security is provided to the child up to 25 years of age to complete and achieve their milestones by offering them a lump sum amount on the maturity of the policy.
The key features of the Children Money Back Policy are mentioned below:
- Usually, financial security is provided for one child at a time in a single policy
- The policy offers survival benefits, death benefits, and maturity benefits.
- Sum assured ranges from Rs. 1 Lakh up to the highest no upper limit.
- The premiums can be paid yearly, half-yearly or monthly and there is a grace period of 15 days and sometimes it can extend up to 30 days.
- Add-on features are available to choose like Premium Waiver Benefit in case of the death of the main proposer.
- A loan facility is available under this plan.
Apart from the children’s plan the money-back policy can be bought by anyone or for anyone aged from 13 years to 50-70 years of age. The minimum Sum Assured that can opt is Rs.1 Lakh with a maximum 20 years maturity period. The pay-outs are also at regular time intervals for the insured to live his life in peace and comfort.
Common FAQs
- I heard the money-back policy involves investment. Is it risky?
Compared to the other endowment plans which also involve investments, the money-back policy involves less risk and more benefits.
- What if I fail to pay my premium regularly?
When you miss your regular premium payments the policy enters into a grace period as usual and if you do not pay even within the grace period the policy automatically goes into lapse mode. This can be avoided by buying an add-on called Waiver in your active policy and the policy will be saved from getting lapsed.
- What happens if the policyholder dies in between the policy tenure even before reaching the maturity of the policy?
In cases like these, the survival benefits will not be provided anymore. Instead, the nominee/ nominees of the insured will be eligible to receive the whole of the maturity amount even if survival benefits are paid in the past. They may receive bonuses as well if any.