LIC’s New Money Back Plan-20 years
When it comes to insurance, since the last 60 years, LIC is the most preferred choice for millions of Indians. It delivers a plethora of choices to its customers, as per their varied needs. LIC’s New Money Back Plan is a non-linked plan that gives a perfect blend of life coverage along with periodic payments throughout the term of the plan. To understand the plan better, let us understand the concept of a money back plan.
The Meaning of a Money Back Plan
In simple words, money back plan is a protection plan in which the insured individual rather than receiving a lump sum amount on the maturity of the term policy, receives a certain percentage of the basic sum assured at uniform time intervals. The plan is like an endowment policy that provides the policyholder with an advantage of liquidity. If in case the insured individual dies in the course of the term period, the nominee receives the whole sum assured, without the survival benefits being deducted. Money Back Plans is deemed to be ideal for individuals who are seeking a minimum-risk plan that also provides liquidity.
LIC’s New Money Back Plan-20 years-Features
LIC’s New Money Back Plan-20 years has a holding of 20 years and during this period of time, the insured individual receives a specific percentage of the sum assured, on regular basis.
Some other properties of LIC’s New Money Back Plan-20 years are mentioned below
- LIC’s New Money Back Plan-20 years is a participating conventional plan.
- It is a simple money back plan that provides the option of Bonus
- The plan continues for 20 years, however, the premium has to be paid only for 15 years
- If the insured survives the policy till the completion of 5th, 10th and 15th year, 20% of the basic sum assured is paid, this is the Survival Benefit
- The surplus 40% is paid out at the end of the term plan along with accrued benefits, if the insured out-lives the term
- If in case the insured individual dies during the tenure of the plan, the basic sum assured along with the bonus that has been accrued is paid out to the nominee as the Death Benefit
LIC’s New Money Back Plan-20 years-Benefits
LIC’s New Money Back Plan-20 years enables the insured in giving his family financial support not just when he is around but also in his absence. Let us take a look at the benefits of this plan.
If the insured individual dies within the policy tenure, the nominee would receive the death benefit and the policy would be terminated.
Death Benefit = Sum Assured on Death + accrued Simple Reversionary Bonus + Final Additional Bonus if any.
Sum Assured on Death is the higher of:
- 10 times the Annualised Premium
- 125% of the Sum Assured which is chosen at the commencement of the policy
Subject to a minimum of 105% of the premiums that have been paid.
- LIC’s accidental death and disability benefit rider are provided for the policyholder to enhance his existing policy.
- If the frequency of premium paying is yearly or bi-yearly the policyholder can get modal discount.
- As per Section 80C and 10 (10D) of the Income Tax Act, there is tax-benefit on the premium paid and the death benefit and maturity benefit.
However, in the conditions given below, the plan may be invalid, even if it is in force. The death or disabil-ity claim can be rejected if the death or disability has been due to:
- Deliberate self injury
- Injuries from participating in riots, rebellion, war, adventure sports
- Employment in Army or Police Services
- Participating in any criminal acts
Survival Benefits would be paid to the policyholder on survival on the pre-defined schedule.
|Schedule for Survival Benefit
|Survival Benefit paid
|At the end of the 5th year
|20% of the Sum Assured
|At the end of the 10th year
|20% of the Sum Assured
|At the end of the 15th year
|20% of the Sum Assured
|Maturity Benefit at the end of the 20th year
|The remaining 40% of the Sum Assured is paid along with Simple Reversionary Bonus and Final Additional Bonus
Maturity Benefit is paid to the policyholder when he outlives the entire policy tenure of 20 years.
Maturity Benefit = The remaining 40% of the Sum Assured is paid along with Simple Reversionary Bonus and Final Additional Bonus
Other Features of LIC’s New Money Back Plan-20 years
Given below are other essential details of the LIC’s New Money Back Plan-20 years.
- Accidental Death and Disability Rider
The policyholder has the option to add on a rider to the policy either while purchasing the policy or afterwards, but while the policy is in force. By adding an extra sum of money to the premium, the insured can add the accidental death and disability benefit rider to the policy.
- If in case the insured individual dies in an accident the nominee will receive a lump sum amount that comprises of the death benefit along with an extra benefit of the accidental death rider.
- If in an accident the policyholder suffers permanent disability within 6 months of the accident date, he will receive an amount which is equal to the assured accidental benefit, in monthly instalments over a 10 year period.
- Simple Reversionary Bonus
- At the end of the policy year, on the basis of per thousand of the sum assured that is selected by the policy holder, the Simple Reversionary Bonus is calculated.
- Though the bonus is collected during the term of the policy, it is payable at the maturity or is included in the death benefit.
- The rate of the bonus depends on the experience of LIC with the New Money Back Plan-20 years.
- Final Additional Bonus
- This bonus, as the name suggests, is received along with a death or a maturity claim.
- However, for this bonus the policy should be in force for a minimum period.
- Non-Forfeiture Regulations
Under LIC’s New Money Back Plan-20 years if the insured has paid fewer than 3 years’ premium and hasn’t paid the subsequent instalments, the benefits under the policy will terminate once the grace peri-od expires. Nothing would be payable to the policy holder thereafter.If in case the initial 3 years premium amount has been duly paid, the plan would not be invalidated completely, but would survive as a paid-up policy. The sum assured will now be reduced.
- Surrender Value
The policyholder has the freedom to give-up his policy after 3 years of premium payment. The guaranteed surrender value is the percentage of the total of the premiums that have been paid, not including the premium paid for the rider. The amount would also depend on the total number of years after which the policy is surrendered.
LIC will not serve any claims other than to the extent of 80% of the premiums paid that would exclude taxes, rider premiums etc. Also, if the individual commits suicide within one year of policy revival, a sum that is higher of 80% of the premiums paid till the death of the insured or the surrender value, is paid to the nominee.
- Cooling-off Period
There is a cooling-off period for customers. If the policyholder is unconvinced with LIC’s New Money Back Plan-20 years, he can cancel it within 15 days of the commencement of the policy, if of course no claims have been processed.
LIC’s New Money Back Plan-20 years-Claim Requirements
- Death Claim
To make a death claim the beneficiary needs to first lodge the claim. He then has to submit:
- Corporation prescribed Claim forms
- Original Policy Papers
- NEFT Mandate
- Proof of Title
- Proof of Detail
- Medical Treatment prior to death
- Maturity Claim
If the policy holder has to make a maturity claim, he needs to submit:
- Discharged Form by Corporation
- Original Policy Papers
- NEFT Mandate from the Claimant
- Bank Details
- Accidental Disability/Death Claim
If the death/disability of the insured individual is due to an accident then to make a claim the following documents are to be presented:
- Photocopy of the FIR
- Report of Post Mortem
- Panchnama Copy
- If the accident was reported in newspaper then the newspaper cuttings
- If it was vehicular accident, Driver’s Licence
- Report of the Police Inquest
- Final/Conclusion Report of Police
- Hospital Treatment Records
|Age of the Life Insured (in years)
|Premium In INR
|78/ INR 1,000 Sum Assured
|79.1/ INR 1,000 Sum Assured
|82.95/ INR 1,000 Sum Assured
|92.05/ INR 1,000 Sum Assured
Rebates and Discounts: This policy offers a rebate in premium for Annual and Semi-Annual modes and a discount in premium for high sum assured.
|2% of Tabular premium
|1% of Tabular premium
|Quarterly and Monthly
High Sum Assured Discount
|INR 1,00,000 to INR 1,95,000
|INR 2,00,000 to INR 4,95,000
|2% of Basic Sum Assured
|INR 5,00,000 and above
|3% of Basic Sum Assured
So, the premium for a 30-year-old male non-smoker would be
|Age of the Life Insured
|20 years (Fixed)
|Premium Paying Term
|15 years (Fixed)
So, the premium would be 79.1/1000 * 100000 = INR 7,910
However, since there is Mode Rebate for Annual Mode and high Sum Assured, it is INR 7,752.
LIC’s New Money Back Plan-20 years is an insurance plan that provides an appealing blend of life cover along with uniform payments during the policy term.
A money back plan is a plan where the insured individual rather than getting a lump sum amount at the maturity of the term policy, gets a certain percentage of the sum assured at regular time intervals.
The insured should be between the age of 13-50 years. The maturity age is 70 years.
If the insured individual survives the policy till the end of 5th, 10th and 15th year, 20% of the sum as-sured is paid. This amount is called the Survival Benefit.
The insured will be eligible for a surrender value if he has made initial three years of premium payment. The guaranteed surrender value is a percentage of the sum total of the paid premiums, not including the premium paid for rider. The percentage would also be dependent on the number of years after which the policy is surrendered.
The policy holder has to present an Income Proof, ID Proof, Proof of Age and a Proof of his Address.
Up to INR 1.5 lakhs the premium amount is tax-deductible under Section 80C of the Income Tax Act. The maturity and the death benefit that are received are tax deductible under section 10 (10D).
If the payment frequency is quarterly, bi-yearly or yearly the policy holder has a grace period of 30 days. In case of monthly instalments the allotted grace period is of 15 days.
Once the plan completes a period of three years the policy holder can ask for a loan. The loan amount has to be within the surrender value of the plan.
When the policy lapses, i.e. the premiums are not duly paid on time but the money is not withdrawn by way of surrender, then the policy is considered to be in paid-up state and is called a paid-up policy and it continues with reduced benefits.