LIC’s New Money Back Plan-25 years
Most of us wish to invest our hard-earned money in traditional life insurance policies for a long term so that we are able to create a safe and guaranteed amount. For most Indians LIC has been the first choice for all their insurance needs.
LIC’s New Money Back Plan-25 years is a simple participating anticipated endowment plan. This conventional money back plan provides an appealing blend of insurance cover along with recurrent payments during the policy’s 25 year long term.
Features of LIC’s New Money Back Plan-25 years
LIC’s New Money Back Plan-25 years has a tenure of 25 years, though the premium is paid for a tenure of 20 years only. During the tenure of the policy the Policyholder receives a percentage of the basic sum assured, on a periodic basis.
The other features of LIC’s New Money Back Plan-25 years are given below :
- The plan is a participating conventional plan.
- LIC’s New Money Back Plan-25 years is an uncomplicated money back plan that comes with the addi-tional benefit of Bonus.
- The policy continues for 25 years whereas the premium is to be paid only for a term of 20 years.
- If the Policyholder remains alive till the end of the 5th year, the 10th year, the 15th year and the 20th year, 15% of the sum assured is paid in all the years respectively. This amount that the individual re-ceives throughout the policy term is called the Survival Benefit.
- The remaining 40% of the total sum assured is paid at the culmination of the term policy along with the built-up benefits, if the Policyholder survives the term.
- In case the individual dies before the end of term of the policy, the sum assured and the bonus that has been collected is paid to the nominee or the beneficiary as the Death Benefit.
Benefits of LIC’s New Money Back Plan-25 years
LIC’s New Money Back Plan-25 years helps the Policyholder in providing financial support to his loved ones, not only when he is alive but even if he is not around. The benefits of LIC’s New Money Back Plan-25 years are given below :
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 X 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 disability 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||15% of the Sum Assured|
|At the end of the 10th year||15% of the Sum Assured|
|At the end of the 15th year||15% of the Sum Assured|
|At the end of the 20th year||15% of the Sum Assured|
|Maturity Benefit at the end of the 25th 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 25 years.
Maturity Benefit = The remaining 40% of the Sum Assured is paid along with Simple Reversionary Bonus and Final Additional Bonus.
Participation In Profits
Like mentioned earlier LIC’s New Money Back Plan-25 years is a participating plan. If the policy is in full force and if the Corporation deems right then the policy shall participate in profits and would therefore be eligible for a Simple Reversionary Bonus, at a rate which is declared by the Corporation itself.
Eligibility Criteria for LIC’s New Money Back Plan-25 years
|Sum Assured||Minimum INR 1 lakh, No upper limit|
|Entry Age||Minimum 13 years, Maximum 45 years|
|Cover Stoppage||70 years|
|PT or Policy Tenure||25 years|
|PPT or Premium Paying Tenure||20 years|
|Frequency for Premium Payment||Monthly, Quarterly, Bi-Annually, Annually.|
|Age of the Life Insured (in years)||Premium In INR|
|20||60/ INR 1000 Sum Assured|
|30||61.45/ INR 1000 Sum Assured|
|40||61.95/ INR 1000 Sum Assured|
|45||70.15/ INR 1000 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.
|Annual Mode||2% of Tabular premium|
|Half-yearly Mode||1% of Tabular premium|
|Quarterly and Monthly||NIL|
High Sum Assured Discount
|INR 1,00,000 to INR 1,95,000||NIL|
|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||30 years|
|Policy Tenure||25 years (Fixed)|
|Premium Paying Term||20 years (Fixed)|
|Sum Assured||INR 1,00,000|
So, the premium would be 61.45/1000*1,00,000 = 6145
However, since there is Mode Rebate for Annual Mode and high Sum Assured, it is INR 6022.
Other Features of LIC’s New Money Back Plan-25 years
Let us now take a look at some of the other important aspects of the LIC’s New Money Back Plan-25 years
- Accidental Death and Disability Rider
To enhance the life, cover furthermore, the policyholder can add on a rider to his policy either at the time of by buying the plan or even later, while the policy is still active. With the addition of a nominal amount to the premium amount, the policyholder can include the accidental death and disability benefit rider to his plan.
Unfortunately, in case the insured dies in an accident, the beneficiary would receive a lump sum amount which includes the death benefit and an extra amount of the accidental death rider. If within six months of the date of accident the policyholder has to suffer a permanent disability, he would receive the assured accidental benefit, in the form of per month instalments over a time period of 10 years.
- Non-Forfeiture Regulations
If the Policyholder has paid less than 3 years’ premium and has not paid the following instalments, all the benefits that were assured under the policy will cease once the grace period is over. The Policyholder would not be eligible for any kinds of payouts thereafter.
However, if 3 years premiums have been paid in due manner, the policy will not be negated wholly, but would be considered as a paid-up policy with a reduced basic sum assured.
- Surrender Value
There is a provision to surrender the policy for cash at any time during the tenure of the policy, once three years’ premiums have been cleared. The insured has the option to surrender his policy after three years of regular premium payment. The surrender value that is guaranteed is the percentage of the whole amount of premiums that have been paid. This does not include the premium that is paid towards the rider. The amount is directly dependent on the number of years for which the premiums were paid before the policy surrender.
No claims will be served by the Corporation except to the limit of 80% of the paid premiums which would not include taxes, rider premiums etc. If the individual, irrespective of being sane or insane, commits suicide within one year of renewal of the policy, an amount that is higher of 80% of the premiums that are paid till the death of the individual or the surrender value, is payable to the nominee.
In case the suicide is committed within one year of policy renewal an amount that is higher of 80% of the premiums that have been paid till the date of death.
- Cooling-off Period
In a cooling off period, the new customer is given a period of few days to decide if he really wishes to continue with the policy that he has bought. There is a cooling-off period for the customers of LIC’s New Money Back Plan-25 years, the Policyholder can return the policy within 15 days of the beginning of the policy, after fulfilling the required conditions.
- Claim Requirements for LIC’s New Money Back Plan-25 years
In order to make a death claim, after lodging the claim the beneficiary needs to submit the following doc-uments at a LIC registered office :
- LIC’s New Money Back Plan-25 years Claim Form
- The original Papers of the Policy
- NEFT Mandate
- Title Proof
- Proof of Detail
- Medical Treatment Documents prior to death
- Discharged Form issued by the Corporation
- Original Policy Papers
- Claimant’s NEFT Mandate
- Bank Details for transfer of money
- A copy or the FIR
- Report of the Post Mortem
- Copy of the Panchnama
- Newspaper cuttings if in case the accident has been reported.
- In a vehicular accident where the insured was driving, Driver’s Licence must be presented.
- Report of the Inquest made by the Police
- Final Report of the Accident as given by the Police
- Records of the Hospital Treatment
LIC’s New Money Back Plan-25 years is an insurance plan that provides life cover along with periodic payments during the term. Along with the survival benefits the Policyholder gets maturity benefit as well as a bonus, if there is any. This feature of LIC’s New Money Back Plan-25 years makes it unique and popular.
In simple words a money back plan is an insurance plan where along with a systematic liquidity you can also get a maturity benefit. Rather than receiving the maturity benefit in a lump sum amount at the end of the term policy, the insured individual has the option to get a specific share out of the sum assured at periodic intervals.
Under the LIC’s New Money Back Plan-25 years, if the insured individual is alive when the policy reaches the 5th, 10th, 15th and 20th year, 15% of the sum assured is paid to the individual. This amount that the policyholder receives every 5 years is called the Survival Benefit.
The Policyholder needs to present a Proof of his:
- Age and
If a police holder wishes to capitulate his policy, he has the provision to do so. The money that he would get then back is the Surrender Value. But it should be remembered that the policyholder will receive a surrender value only if he has made three years of regular premium payment. The guaranteed surrender value is the percentage of the total of the premiums that have been paid, this does not include the premium paid for the rider benefits. The percentage also depends on the number of years for which the premiums were paid.
If less than 3 years’ premium have been paid by the Policyholder all the benefits under the policy will be terminated once the grace period is completed. The Policyholder would not receive any payouts.
If in case, 3 years premiums have been duly paid, the policy will not be void completely. It would be treated as a paid-up policy that would come with a lesser basic sum assured.
Like all other life insurance plans the premium amount up to INR 1.5 lakhs is tax-deductible under Sec-tion 80C of the Income Tax Act. The maturity benefit and the death benefit received, are tax free under section 10 (10D).
When the policyholder pays the premium quarterly, bi-annually or annually he gets a grace period of 30 days but if he is paying monthly instalments, the grace period is 15 days.
These are terms and conditions under which the money paid towards the policy would not be forfeited completely.