Let's go over exactly what you will receive when your LIC Money Back Plan matures and when investing that money makes the most sense.
The following is how the funds are disbursed when you invest in a LIC Money Back Plan (such as the New Money Back Plan-20 Years, Plan 720, or the New Money Back Plan-25 Years, Plan 721):
1. Advantages of Survival:
- 20-year strategy (Plan 720): At the conclusion of the fifth, tenth, and fifteenth policy years, you will receive 20% of the Basic Sum Assured (BSA). At maturity, the remaining 40% of BSA is paid out along with any accumulated bonuses.
- 25-year plan (Plan 721): At the conclusion of the fifth, tenth, fifteenth, and twentieth years, you will receive 15% of BSA. Let's go over exactly what you will receive when your LIC Money Back Plan matures and when investing that money makes the most sense.
The following is how the funds are disbursed when you invest in a LIC Money Back Plan (such as the New Money Back Plan-20 Years, Plan 720, or the New Money Back Plan-25 Years, Plan 721):
2. Maturity Benefit:
When your policy reaches maturity whether it's after 20 or 25 years, depending on what you chose if you're still around, LIC will pay you:
- The remaining portion, which is 40% of the Basic Sum Assured (BSA)
- A Simple Reversionary Bonus, which is declared every year and is attached to your policy
- A Final Additional Bonus (FAB), if it's declared when your policy matures
These bonuses can boost your final payout, but keep in mind they’re not guaranteed; they rely on how well LIC performs.
3. Death Benefit:
If the insured individual passes away during the policy term, the nominee will receive:
- The Sum Assured on Death, which is the greater of:
- 125% of BSA, or
- 7× the annual premium
- But it won’t be less than 105% of the total premiums paid up to that point
- Plus any vested bonuses (SRB + FAB), even if some survival benefits have already been paid out.
This provides solid life coverage, ensuring your family isn’t left with just the savings part.
4. When to Use the Maturity Proceeds Smart Timing:
- Right at maturity: This is perfect if you need a lump sum for your kids’ education, your retirement fund, or big purchases.
- Staggered approach: You can take survival benefits earlier for smaller needs and reinvest the maturity amount for long-term growth.
- Surrender or loan: You can surrender your policy after paying 2–3 premiums, but keep in mind the surrender value might be lower than what you paid in premiums. If you need cash during the policy term, loans of up to 80–90% of the surrender value are available.
5. Summing It Up:
- You’ll receive periodic payouts (for a 20-year plan: three times 20% of BSA; for a 25-year plan: four times 15%), followed by a final 40%, plus bonuses.
- The death benefit is usually much higher than the survival payouts, making it great for protection.
- Use the maturity money as you see fit either reinvest it wisely or use it to meet your long-term financial goals.
Quick Example (20-year, ₹10 lakh BSA):
- 5 years: ₹2 lakh
- 10 years: ₹2 lakh
- 15 years: ₹2 lakh
- 20 years (maturity): ₹4 lakh + bonuses