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LIC's New Money Back Plan-25 Years 721: A Comprehensive Guide
LIC's New Money Back Plan 721 is a classic, non-linked, participating life insurance plan designed for long-term financial security and periodic returns. With a policy term of 25 years, it combines insurance coverage, guaranteed survival benefits, and a lump sum maturity benefit, making it a popular choice for individuals seeking both protection and a steady return on their investment. This article offers a full breakdown of the plan's features, eligibility, benefits, tax advantages, and how it stands out among other money-back plans in the Indian insurance market.
Introduction to LIC's New Money Back Plan 721
LIC's New Money Back Plan 721 is a traditional, non-linked, participating money-back plan that provides life insurance and periodic returns over a 25-year term. The plan is structured to give the policyholder a set percentage of the sum assured at regular intervals, with the remainder paid at maturity. This structure ensures liquidity during the policy term and a substantial corpus upon completion, making it ideal for long-term financial planning.
The plan is suitable for individuals who want to secure their family’s financial future, meet major life goals, or build a corpus for retirement, children’s education, or marriage. As a participating plan, it also offers the potential for bonus additions, based on LIC's profits, enhancing the overall returns.
Why Choose LIC's New Money Back Plan 721?
People choose LIC's New Money Back Plan 721 for several compelling reasons:
Guaranteed Survival Benefits: The plan pays out 15% of the basic sum assured at the end of the 5th, 10th, 15th, and 20th years, providing regular liquidity throughout the policy term.
Maturity Benefit: At the end of 25 years, the policyholder receives the remaining 40% of the basic sum assured plus any accrued bonuses, offering a substantial lump sum for future needs.
Life Insurance Coverage: The plan offers life insurance for the entire 25-year term, ensuring financial security for dependents.
Bonus Participation: As a participating plan, it shares in LIC's profits, with bonuses added to the policy, which can significantly increase the final payout.
Tax Benefits: Premiums paid are eligible for tax deduction under Section 80C, and the maturity/survival benefits are tax-free under Section 10(10D), making it a tax-efficient investment option.
Flexibility: The plan offers flexible premium payment options (annual, half-yearly, quarterly, monthly) and the option to enhance coverage with riders.
Who is Eligible for LIC's New Money Back Plan 721?
Understanding eligibility is crucial for selecting the right insurance plan. Here are the detailed eligibility criteria for LIC's New Money Back Plan 721:
Entry Age
Minimum age: 13 years
Maximum age: 45 years (at the time of policy purchase).
Policy Term
Fixed at 25 years for all policyholders.
Premium Payment Term
20 years (the policyholder pays premiums for the first 20 years of the policy term).
Sum Assured
Minimum sum assured: ₹2,00,000 (subject to change by LIC)
No upper limit; the sum assured can be chosen based on financial needs and income proof.youtube
Premium Payment Options
Premiums can be paid annually, half-yearly, quarterly, or monthly, depending on convenience.
Medical Requirements
For higher sum assured amounts, medical tests may be required as per LIC's underwriting guidelines.
Key Features of LIC's New Money Back Plan 721
1. Survival Benefits
The policyholder receives 15% of the basic sum assured at the end of the 5th, 10th, 15th, and 20th years, provided the policy is in force.
Example: If the basic sum assured is ₹10,00,000, the policyholder will receive ₹1,50,000 at the end of each specified year.
2. Maturity Benefit
At the end of the 25-year policy term, the policyholder receives the remaining 40% of the basic sum assured plus any accrued bonuses.
Example: With a sum assured of ₹10,00,000, the maturity benefit will be ₹4,00,000 plus bonuses.
3. Death Benefit
If the policyholder passes away during the policy term, the nominee receives the sum assured on death, which is the higher of:
Basic sum assured
10 times the annual premium
105% of the total premiums paid
Additionally, any accrued bonuses are also paid.
4. Bonus Participation
The plan participates in LIC's profits, with bonuses added to the policy annually.
Bonuses are paid at maturity or on death.
5. Rider Benefits
Additional riders, such as the Accident Death and Disability Benefit Rider, are available for purchase at an extra premium, providing extra coverage.
6. Loan Facility
After the policy acquires a surrender value (usually after 1 year), the policyholder can avail of a loan against the policy.
7. Surrender Value
The policy acquires a surrender value after 1 year, allowing for partial or full surrender if needed, subject to LIC's terms.
8. Tax Benefits
Premiums paid are eligible for tax deduction under Section 80C.
Surviving benefits, maturity benefit, and death benefit are tax-free under Section 10(10D).
How LIC's New Money Back Plan 721 Works: An Example
Let’s consider a scenario to illustrate the plan’s workings:
Entry Age: 25 years
Sum Assured: ₹10,00,000
Policy Term: 25 years
Premium Paying Term: 20 years
Survival Benefits: 15% of sum assured at end of 5th, 10th, 15th, and 20th years
₹1,50,000 at the end of each specified year
Maturity Benefit at Age 50: ₹4,00,000 plus bonuses
Total Payout: ₹6,00,000 (survival benefits) + ₹4,00,000 (maturity) + bonuses
This structure ensures that the policyholder receives regular payouts throughout the policy term, with a substantial lump sum at maturity, making it ideal for long-term financial planning.
Documentation Required
Identity and address proof of the policyholder
PAN card (for tax purposes)
Completed application form
Proof of income (for higher sum assured)
Medical reports (if required for higher sum assured)
Comparison with Other Money Back Plans
| Feature | LIC's New Money Back Plan 721 | Other Money Back Plans (Market) |
|---|---|---|
| Policy Term | 25 years | Varies (10-30 years) |
| Survival Benefits | 15% at 5, 10, 15, 20 years | Varies (some offer periodic payouts) |
| Maturity Benefit | 40% of sum assured + bonuses | Varies (some offer fixed, some market-linked) |
| Death Benefit | Sum assured + bonuses | Varies (some offer fixed, some market-linked) |
| Bonus Participation | Yes (LIC profits) | Varies (profit-sharing) |
| Tax Benefits | Yes (80C, 10(10D)) | Yes (plan-dependent) |
| Flexibility in Premium Payment | Yes (annual, half-yearly, etc.) | Varies |
| Surrender Value | Yes (after 1 year) | Yes (varies) |
| Risk Factor | Low (non-linked, guaranteed) | Varies (market-linked or fixed) |
Frequently Asked Questions
Q1. What is the minimum and maximum age for entry?
The policyholder must be between 13 and 45 years old at entry.
Q2. Can I pay premiums monthly?
Yes, premiums can be paid monthly, quarterly, half-yearly, or annually.
Q3. What happens if the policyholder dies before maturity?
The nominee receives the sum assured on death plus any accrued bonuses.
Q4. Are there any riders available?
Yes, riders like Accident Death and Disability Benefit Rider are available for additional coverage.
Q5. Is the plan eligible for tax benefits?
Yes, premiums are eligible for tax deduction under Section 80C, and the maturity/survival benefits are tax-free under Section 10(10D).
Q6. Can I surrender the policy?
Yes, the policy can be surrendered after 1 year, subject to LIC's terms.
Conclusion
LIC's New Money Back Plan 721 is a reliable, secure, and flexible investment option designed to meet the long-term financial needs of individuals and families. Its combination of guaranteed periodic payouts, lump sum maturity benefit, life insurance coverage, and tax advantages makes it a top choice for those seeking both protection and financial growth. The plan's flexibility, transparency, and participation in LIC's profits ensure that policyholders can build a strong financial foundation for their future, with the added peace of mind that comes from a trusted, government-backed insurer.
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