LIC Money Back Benefits Explained — Survival & Maturity Benefits
LIC Money Back policies are one of the most popular products sold by LIC agents because they uniquely offer periodic cash payouts during the policy term itself — unlike endowment plans where you wait until maturity. But how exactly do they work? Let's break it down clearly.
What is a Money Back Policy?
A money back policy is a type of endowment plan where a portion of the Sum Assured (SA) is paid out to the policyholder at regular intervals during the policy term. These periodic payouts are called Survival Benefits. The remainder is paid at maturity along with accumulated bonuses.
LIC New Money Back Plans Available
- Plan 920 (20 Years): Pays 20% of SA at the end of every 5 years (years 5, 10, 15), remaining 40% + bonus at maturity (year 20)
- Plan 920 (25 Years): Pays 15% of SA at the end of every 5 years (years 5, 10, 15, 20), remaining 40% + bonus at maturity (year 25)
Understanding Survival Benefits
Survival benefits are the periodic cash payouts you receive if you're alive at specific policy milestones. These are separate from and in addition to the death benefit — meaning if you die, your nominee still gets the full Sum Assured regardless of survival benefits already paid.
Illustration (₹5 Lakh SA, 20-Year Plan, Age 30)
| Year | Event | Payment |
|---|---|---|
| 1–20 | Premium Payment | ~₹32,000/yr (approx.) |
| Year 5 | Survival Benefit | ₹1,00,000 (20% of SA) |
| Year 10 | Survival Benefit | ₹1,00,000 (20% of SA) |
| Year 15 | Survival Benefit | ₹1,00,000 (20% of SA) |
| Year 20 | Maturity Benefit | ₹2,00,000 + Bonus (est. ₹3–4L) |
| Total Payout (if survived) | ~₹8–9 Lakh | |
Death Benefit — The Important Part
Here's what makes money back plans standout on the insurance side: if you die at any point during the policy term, your nominee receives the FULL Sum Assured (₹5 lakh in our example) plus all vested bonus — regardless of how many survival benefit installments have already been paid. This is unlike a maturity-only plan where the SA reduces over time.
Bonus in LIC Money Back Plans
LIC money back plans participate in LIC's profits and earn Simple Reversionary Bonus (declared annually per ₹1,000 of SA) throughout the policy term. Additionally, a Final Additional Bonus (FAB) may be paid at maturity or death if the policy has been in force for a minimum period.
Historically, LIC has declared bonus rates between ₹40–₹65 per ₹1,000 of SA depending on the plan and term. For a ₹5 lakh SA, 20-year plan, the total bonus corpus alone could be ₹3L–₹4L.
Who Should Buy a Money Back Policy?
- ✅ Individuals with planned future expenses at fixed intervals (5-year cycles)
- ✅ Parents planning children's school fees every 5 years
- ✅ Those who want some cash liquidity during the policy term
- ✅ Conservative investors who want guaranteed payouts with insurance cover
Money back plans are not ideal for those maximizing returns (endowment or ULIP performs better) or those primarily needing maximum death coverage (term plan is far better value).
Tax Treatment
- Survival benefits: Completely tax-free under Section 10(10D)
- Maturity benefit: Tax-free under Section 10(10D) if annual premium ≤ 10% of SA
- Death benefit: Always tax-free
- Premium paid: Deductible under Section 80C up to ₹1.5 lakh/year
💰 Use our free LIC Money Back Calculator to see your exact premium and survival benefit schedule.