LIC Money Back Policy 2025: Benefits, Plans & Complete Guide

Last Updated: 15 Oct 2025 | By Keyur Tirgar, LIC Agent Code: 04699-102


Happy Indian family with LIC Money Back Policy showing financial security and periodic returns

Introduction

Looking for a life insurance policy that doesn't just protect your family but also provides you with periodic cash benefits during your lifetime? LIC Money Back Policy might be exactly what you need. Unlike traditional life insurance where you receive benefits only at maturity or in case of unfortunate death, money back policies give you survival benefits at regular intervals while keeping your life cover intact.

In this comprehensive guide, I'll explain everything you need to know about LIC Money Back policies in 2025 - from how they work to which plan suits your needs best. As a certified LIC agent with 5+ years of experience serving families across Rajasthan, I've helped hundreds of clients choose the right money back policy for their financial goals.

What You'll Learn:

  • What is a Money Back Policy and how it works
  • Complete details of popular LIC Money Back plans
  • Benefits and features comparison
  • Who should buy money back policies
  • Tax benefits and returns
  • How to choose the right plan
  • Application process simplified

Let's dive in!


What is a LIC Money Back Policy?

A Money Back Policy is a type of life insurance plan that combines protection with periodic returns. Unlike traditional endowment policies where you receive the sum assured only at maturity, money back policies pay you a percentage of the sum assured at regular intervals during the policy term - while your life cover remains fully active.

Key Characteristics:

Dual Benefit Structure:

  • Survival Benefits: Regular cash payouts (typically 20-25% of sum assured) at specified intervals
  • Life Cover: Full death benefit throughout policy term regardless of survival benefits paid
  • Maturity Benefit: Final payment at policy end along with bonuses

Example to Understand: Suppose you buy a 20-year money back policy with ₹10 lakh sum assured:

  • Year 5: You receive ₹2 lakh (20%)
  • Year 10: You receive ₹2 lakh (20%)
  • Year 15: You receive ₹2 lakh (20%)
  • Year 20: You receive ₹4 lakh (40%) + bonuses

Throughout these 20 years, if anything happens to you, your family gets the FULL ₹10 lakh death benefit - even after you've received ₹6 lakh as survival benefits!

This unique feature makes money back policies attractive for people who want life insurance protection plus liquidity for medium-term financial goals.


How LIC Money Back Policy Works

Understanding the mechanics of a money back policy helps you appreciate its value:

1. Premium Payment

You pay regular premiums (annual, half-yearly, quarterly, or monthly) for a specified premium payment term - typically shorter than the policy term.

2. Survival Benefits

At predetermined intervals (usually every 5 years), you receive a percentage of the sum assured as survival benefit - completely tax-free under Section 10(10D).

3. Continuous Life Cover

Your family remains protected with full death benefit throughout the policy term. Death benefit = Sum Assured + Accrued Bonuses - even if survival benefits have been paid out.

4. Bonus Accumulation

LIC declares bonuses annually based on performance. These bonuses accumulate and are paid:

  • With each survival benefit
  • At maturity
  • To nominee in case of death

5. Maturity Benefit

At policy end, you receive:

  • Remaining sum assured (after survival benefits)
  • Final bonus
  • All accumulated bonuses

6. Loan Facility

After policy acquires surrender value (typically after 3 years), you can take a loan against the policy at reasonable interest rates.

LIC Money Back Policy periodic survival benefit payment schedule and maturity timeline illustration

LIC offers several money back policy variants. Here are the most popular ones:

1. LIC New Money Back Policy - 20 Years (Plan 820)

Overview:
The most popular money back plan offering 20% survival benefits every 5 years.

Key Features:

  • Policy Term: 20 years
  • Premium Payment: 15 years
  • Survival Benefits: 20% of sum assured at end of 10th, 15th, and 20th years (total 60%)
  • Death Benefit: Sum assured + loyalty addition + accumulated bonuses
  • Maturity Benefit: 40% of sum assured + bonuses

Eligibility:

  • Minimum entry age: 13 years
  • Maximum entry age: 45 years
  • Minimum sum assured: ₹1,00,000
  • Maximum sum assured: No limit

Ideal For:

  • Young professionals planning for medium-term goals
  • Parents planning for child's higher education (milestone payments)
  • First-time insurance buyers wanting periodic returns

Premium Example:

  • Age: 30 years, Sum Assured: ₹10 lakh
  • Annual Premium: ₹65,000 approximately (varies by age and health)

2. LIC New Money Back Policy - 25 Years (Plan 821)

Overview:
Extended version for those who want longer coverage with more frequent survival benefits.

Key Features:

  • Policy Term: 25 years
  • Premium Payment: 19 years
  • Survival Benefits: 20% of sum assured every 5 years (at 5th, 10th, 15th, 20th, 25th year) - total 100% returned!
  • Death Benefit: Sum assured + loyalty addition + bonuses
  • Maturity Benefit: 50% of sum assured + bonuses (even though 100% already paid as survival benefits)

Special Feature:
This plan returns 150% of sum assured over policy term (100% as survival + 50% at maturity) plus bonuses!

Eligibility:

  • Minimum entry age: 13 years
  • Maximum entry age: 40 years
  • Minimum sum assured: ₹1,00,000

Ideal For:

  • Individuals wanting maximum liquidity during policy term
  • Long-term financial planning (25-year commitment)
  • Higher periodic cash requirements

3. LIC New Children's Money Back Policy (Plan 832)

Overview:
Specially designed for children, providing money at different educational milestones.

Key Features:

  • Policy Term: 25 years
  • Premium Payment: Up to child attaining 20 years of age
  • Survival Benefits: 20% of sum assured at ages 18, 20, 22 years
  • Maturity Benefit: 40% of sum assured + bonuses at age 25
  • Special Feature: If parent dies, all future premiums waived, policy continues

Eligibility:

  • Child's age: 0-12 years
  • Minimum sum assured: ₹1,00,000

Ideal For:

  • Parents planning for child's education
  • Securing child's future with guaranteed payouts
  • Protection against parent's demise

4. LIC Single Premium Endowment Plan (Money Back Variant)

Overview:
Pay once, benefit for years - ideal for those with lump sum funds.

Key Features:

  • Single premium payment
  • Shorter policy terms available (12-20 years)
  • Periodic survival benefits
  • Lower overall cost compared to regular premium

Ideal For:

  • People receiving lump sum (bonus, inheritance, retirement corpus)
  • Those wanting to avoid annual premium commitments
  • Senior citizens (within age limits)

Benefits of LIC Money Back Policy

1. Regular Income During Policy Term

Unlike traditional policies where you wait till maturity, money back policies provide cash flow when you might need it - perfect for planned expenses like:

  • Children's college admission fees
  • Marriage expenses
  • Home renovation
  • Business investment
  • Emergency fund building

2. Uninterrupted Life Coverage

This is the biggest advantage - your family's protection never reduces. Even after receiving multiple survival benefits, the full death benefit remains intact. Your family gets:

  • Full sum assured
  • All accrued bonuses
  • Loyalty additions

3. Tax Benefits

Triple Tax Advantage:

  • Section 80C: Premium deduction up to ₹1.5 lakh
  • Section 10(10D): Survival benefits completely tax-free
  • Section 10(10D): Maturity and death benefits tax-free

4. Guaranteed Returns + Bonuses

  • Fixed survival benefits guaranteed in policy document
  • Additional bonuses declared annually by LIC (based on performance)
  • Loyalty additions at maturity (for policies completing term)
  • Historically, LIC has consistently declared bonuses

5. Loan Facility

After policy acquires surrender value:

  • Borrow up to 90% of surrender value
  • Interest rates lower than personal loans (around 8-10%)
  • No documentation hassles
  • Flexible repayment

6. Disciplined Savings

  • Forces regular savings through premium payments
  • Cannot withdraw prematurely (except as loan)
  • Long-term wealth creation
  • Protection from impulsive spending

7. Flexibility

  • Multiple premium payment modes (annual, half-yearly, quarterly, monthly)
  • Optional riders (accidental death, critical illness, term rider)
  • Assignable and can be used as collateral
  • Nomination can be changed anytime

Who Should Buy LIC Money Back Policy?

Money back policies are ideal for specific financial situations:

✓ Perfect For:

1. Young Professionals (25-35 years)

  • Starting family life
  • Planning for milestone expenses
  • Need life cover + regular returns
  • Long investment horizon

2. Parents Planning for Children

  • Education expenses at different stages
  • Marriage planning
  • Guaranteed cash flows aligned with child's age

3. Salaried Individuals

  • Stable income for premium payment
  • Want to supplement income periodically
  • Seeking tax-efficient savings

4. Risk-Averse Investors

  • Don't want market volatility
  • Prefer guaranteed returns
  • Government-backed security (LIC)
  • Capital protection priority

5. First-Time Insurance Buyers

  • Want to see benefits during policy term
  • Builds confidence in insurance
  • Easy to understand product

✗ May Not Be Suitable For:

1. Those Needing Maximum Life Cover at Minimum Cost

  • Term insurance is better option
  • Money back policies have higher premiums
  • Lower coverage for same premium

2. Aggressive Investors

  • ULIP or mutual funds give potentially higher returns
  • Money back returns are moderate (6-8% approx)
  • Market-linked products might suit better

3. Short-Term Goals (Less Than 10 Years)

  • Money back policies are long-term commitments
  • Early surrender leads to losses
  • Fixed deposits or debt funds better for short term

4. People with Irregular Income

  • Premium payment commitment is long
  • Policy lapse risk if premiums not paid
  • Term insurance with lower premium better

Comparison between traditional life insurance and LIC Money Back Policy periodic returns structure

LIC Money Back vs Traditional Endowment vs Term Insurance

Understanding differences helps choose wisely:

Feature Money Back Policy Traditional Endowment Term Insurance
Primary Purpose Protection + Periodic Returns Protection + Lump Sum Savings Pure Protection
Survival Benefits ✓ Yes (20-25% every 5 years) ✗ No ✗ No
Maturity Benefit ✓ Yes (Remaining sum + bonus) ✓ Yes (Full sum + bonus) ✗ No
Life Cover Moderate Moderate Very High
Premium High Moderate Very Low
Liquidity High (periodic payouts) Low (only at maturity) None
Returns Moderate (6-8%) Moderate (6-8%) No returns
Best For Periodic income + protection Long-term savings + protection Maximum protection
Example Premium ₹65,000/year ₹50,000/year ₹12,000/year
Example Coverage ₹10 lakh ₹10 lakh ₹1 crore

My Recommendation as LIC Agent:

  • For primary life cover: Buy term insurance first (₹50 lakh - 1 crore)
  • For savings + moderate cover: Add money back policy (₹5-10 lakh)
  • Never replace term insurance with money back policy - they serve different purposes!

Tax Benefits of LIC Money Back Policy

Section 80C Deduction

Benefit: Reduce taxable income by premiums paid

  • Maximum deduction: ₹1.5 lakh per year
  • Condition: Premium should not exceed 10% of sum assured (for policies issued after April 1, 2012)
  • Premiums for self, spouse, and children eligible

Example:

  • Annual Income: ₹8 lakh
  • Money Back Premium: ₹60,000
  • Taxable Income: ₹7.4 lakh
  • Tax Saved (30% bracket): ₹18,000

Section 10(10D) - Tax-Free Payouts

All policy benefits are completely tax-free:

  • Survival benefits received periodically
  • Maturity benefit
  • Death benefit to nominee
  • Bonus amounts

Condition: Premium should not exceed 10% of sum assured (policies after April 1, 2012). For policies before this date, limit was 20%.

Total Tax Benefit Over Policy Life

20-Year Money Back Policy Example:

  • Premium: ₹60,000/year for 15 years
  • Total tax saved @ 30%: ₹2,70,000 (₹60,000 × 30% × 15 years)
  • All payouts tax-free worth ₹10 lakh+ (sum assured + bonuses)

Effective Return Enhancement: Tax benefits significantly improve post-tax returns compared to taxable investments like FDs.


How to Calculate Returns on Money Back Policy

Let's calculate approximate returns on LIC New Money Back Policy - 20 Years:

Assumptions:

  • Age: 30 years
  • Sum Assured: ₹10 lakh
  • Annual Premium: ₹65,000
  • Premium Payment: 15 years
  • Policy Term: 20 years
  • Assumed Bonus: ₹50 per ₹1,000 sum assured (conservative estimate)

Inflows:

Survival Benefits:

  • Year 10: ₹2,00,000
  • Year 15: ₹2,00,000
  • Year 20: ₹2,00,000

Maturity (Year 20):

  • Remaining Sum Assured: ₹4,00,000
  • Accumulated Bonus (₹50 × 1000 × 20 years): ₹10,00,000
  • Final Bonus (estimated): ₹1,00,000
  • Total at Maturity: ₹15,00,000

Total Inflows: ₹21,00,000

Outflows:

  • Total Premium: ₹65,000 × 15 = ₹9,75,000

Net Gain:

₹21,00,000 - ₹9,75,000 = ₹11,25,000

Approximate Return (IRR):

6.5 - 7.5% per annum (depending on actual bonus rates)

Important Notes:

  • Returns are tax-free (enhancing post-tax returns)
  • Bonuses vary based on LIC's performance
  • This includes valuable life insurance protection
  • Returns are guaranteed + bonus component
  • No market risk

Comparison:

  • Bank FD (taxable): 6-7% (post-tax: 4-5% for 30% bracket)
  • Money Back (tax-free): 6.5-7.5% PLUS life cover
  • PPF (tax-free): 7-7.5% (but no life cover, 15-year lock-in)

How to Buy LIC Money Back Policy

Step-by-Step Process:

Step 1: Assess Your Needs

  • Calculate required sum assured
  • Determine affordable premium
  • Choose policy term based on goals
  • Decide between 20-year or 25-year variant

Step 2: Contact LIC Agent (Recommended)

  • Get personalized advice: Call me at +91 9784309640
  • Compare different plans
  • Get accurate premium quotes
  • Understand all terms clearly

Step 3: Fill Proposal Form

  • Complete proposal form accurately
  • Disclose all material facts (health, lifestyle, occupation)
  • Provide correct age proof and address
  • Choose premium payment mode

Step 4: Submit Documents

Required Documents:

  • Proposal form (duly filled and signed)
  • Age proof (Aadhaar, PAN, Birth Certificate, Passport)
  • Address proof (Aadhaar, Utility Bills, Passport)
  • Income proof (Salary slips, ITR, Form 16)
  • Photographs (passport size)
  • Bank account details
  • Medical reports (if any pre-existing conditions)

Step 5: Medical Examination (If Required)

  • Required for higher sum assured or older age
  • LIC-empaneled medical center visit
  • Basic tests: Blood, Urine, ECG
  • LIC pays for medical tests
  • Reports sent directly to LIC

Step 6: Premium Payment

  • First premium with proposal form
  • Payment modes: Cheque, DD, Online, NEFT
  • Get premium receipt

Step 7: Policy Issuance

  • LIC underwrites the proposal (7-30 days)
  • Policy document issued
  • Review policy document carefully
  • 15-day free look period to return if not satisfied

Step 8: Policy Servicing

  • Set up auto-debit for future premiums
  • Keep policy document safe
  • Note renewal dates
  • Contact agent for any queries

Why Buy Through an Agent (Like Me)?

Advantages:

  • Free personalized consultation
  • Help choosing right plan and sum assured
  • Assistance with documentation
  • Premium calculation and comparison
  • Claims assistance when needed
  • Ongoing policy servicing support
  • Face-to-face guidance

Same Premium: You pay the same premium whether buying online or through agent, but get lifelong support!


Common Questions About LIC Money Back Policy

Q1: What happens if I miss a premium payment?

A: Grace period of 30 days provided. Policy lapses if not paid within grace period. Can be revived within 5 years by paying outstanding premiums with interest and medical evidence (if required).

Q2: Can I surrender the policy before maturity?

A: Yes, after 3 years. You'll receive surrender value (typically 30% of premiums paid in first 3 years, increasing thereafter). However, surrender leads to significant losses - not recommended.

Q3: Are survival benefits mandatory to receive?

A: Yes, LIC automatically pays survival benefits by cheque or bank transfer. You can keep these amounts with LIC to earn interest if you don't need immediate liquidity.

Q4: Can I increase sum assured later?

A: No, sum assured is fixed at policy inception. To increase coverage, buy additional policy.

Q5: What happens if I die during the policy term?

A: Your nominee receives full sum assured + all accrued bonuses, regardless of survival benefits already paid. This is the unique advantage of money back policies.

Q6: Are bonuses guaranteed?

A: Survival benefits are guaranteed as per policy document. Bonuses depend on LIC's performance but LIC has historically declared bonuses consistently for 68+ years.

Q7: Can I take loan against this policy?

A: Yes, after policy acquires surrender value (typically after 3 years). Loan up to 90% of surrender value available at reasonable interest rates.

Q8: Is medical test mandatory?

A: Depends on age and sum assured. Generally not required for sum assured up to ₹25-50 lakh for younger ages. Required for higher amounts or older ages.


Tips for Choosing Right LIC Money Back Plan

1. Match Policy Term with Financial Goals

  • Child's education: Align payouts with schooling milestones
  • Retirement planning: Choose longer term
  • Medium-term goals: 20-year plan sufficient

2. Calculate Affordable Premium

  • Don't exceed 15-20% of annual income
  • Ensure 15-year commitment is comfortable
  • Set up auto-debit for discipline

3. Choose Adequate Sum Assured

  • Minimum ₹5-10 lakh for meaningful benefits
  • Consider future value of money (inflation)
  • Balance between coverage need and premium affordability

4. Consider Your Age

  • Younger buyers get lower premiums
  • Longer coverage period possible
  • Higher sum assured feasible at same premium

5. Add Relevant Riders

  • Accidental Death Benefit Rider (minimal cost, high value)
  • Critical Illness Rider (if no separate health insurance)
  • Term Rider (for additional pure protection)

6. Review Existing Coverage

  • Don't buy money back as primary life insurance
  • First ensure adequate term insurance (10-15 times income)
  • Money back as supplementary savings

7. Disclose Health Facts Honestly

  • Non-disclosure can lead to claim rejection
  • Better to pay slightly higher premium than face claim issues
  • Accuracy is crucial

Final Verdict: Should You Buy LIC Money Back Policy?

✓ Buy If You Want:

  • Guaranteed life cover + periodic returns
  • Tax-free savings
  • Disciplined long-term investment
  • Government-backed security
  • Protection for family + personal liquidity
  • Conservative investment approach

✗ Don't Buy If You Want:

  • Maximum life cover at lowest cost (buy term insurance instead)
  • Aggressive high returns (consider ULIP or mutual funds)
  • Short-term investment (FD better for <10 years)
  • Complete flexibility (mutual funds better)

My Recommendation as LIC Agent:

Ideal Insurance Portfolio:

  1. Primary Protection: Term Insurance (₹50 lakh - 1 crore) - 10-15 times annual income
  2. Savings Component: Money Back Policy (₹5-10 lakh) - periodic returns + moderate protection
  3. Health Protection: Health Insurance (₹5-15 lakh family floater)

Money back policies are NOT a replacement for term insurance but an excellent addition for those who want periodic returns along with life cover.


Take Action Today!

Ready to Secure Your Family's Future with LIC Money Back Policy?

Get Personalized Advice:

📞 Call/WhatsApp: +91 9784309640
📧 Email: tirgarkuriya@gmail.com
📍 Office: Manglam Complex Banswara, Rajasthan

As an authorized LIC agent (Code: 04699-102) with 5+ years experience, I provide:

  • Free consultation and needs analysis
  • Premium calculation and comparison
  • Complete documentation assistance
  • Ongoing policy servicing support
  • Claims assistance when needed

Service Areas: All Over Rajasthan (Jaipur, Jodhpur, Udaipur, Kota, Ajmer, and all cities)

Business Hours:
Monday - Saturday: 10 AM - 7 PM
Sunday: By Appointment


Conclusion

LIC Money Back Policy offers a unique combination of life insurance protection and periodic liquidity - making it an attractive option for individuals who want guaranteed returns during the policy term while keeping their family protected.

With survival benefits every 5 years, full death benefit throughout, tax-free returns, and LIC's proven track record, money back policies serve as excellent supplementary insurance products for your portfolio.

However, remember that these should complement - not replace - term insurance for primary life cover. Calculate your needs carefully, choose the right sum assured, and commit only if you can comfortably pay premiums for 15-20 years.

The best time to buy life insurance was yesterday. The second-best time is today. Don't delay protecting your family and securing your financial goals.

Have questions about which LIC Money Back plan suits you best? Contact me for a free consultation!


Disclaimer: This article provides general information about LIC Money Back policies for educational purposes. Policy terms, conditions, premiums, and benefits are subject to LIC's underwriting and may vary based on age, health, and sum assured. Bonuses are not guaranteed and depend on LIC's performance. For accurate premium quotes and personalized advice, please contact a licensed LIC agent. Read policy documents carefully before purchasing.


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Last Updated: October 15, 2025
Word Count: 4,200+ words
Read Time: 15 minutes

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