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LIC’s New Money Back Plan – 25 Years (Plan 721): Complete
Guide, Benefits, Premium, Returns & Eligibility
Introduction
Life Insurance Corporation of India (LIC) is one of the most
trusted insurance brands in India, serving millions of policyholders for
decades. Among its popular offerings, LIC’s New Money Back Plan – 25 Years
(Plan No. 721) stands out as a traditional life insurance plan that
combines insurance protection, periodic survival benefits, and long-term
savings.
This plan is designed for individuals who want regular
payouts during the policy term while ensuring financial security for
their family in case of an unfortunate event. In this detailed guide, we
will explain everything you need to know about LIC’s New Money Back Plan 25
Years – including features, benefits, eligibility, premium details, returns,
taxation, and who should invest in it.
This article is written to help beginners and investors
understand the policy clearly and make an informed decision.
What Is LIC’s New Money Back Plan – 25 Years (Plan 721)?
LIC’s New Money Back Plan – 25 Years is a non-linked,
participating life insurance policy. “Non-linked” means the policy returns
are not dependent on stock market performance, and “participating” means
the policyholder is eligible to receive bonuses declared by LIC.
The plan provides:
- Periodic
money back payouts during the policy term
- Life
insurance coverage throughout the policy period
- Lump
sum maturity benefit at the end of 25 years
- Financial
protection for nominees in case of death
This plan is suitable for people who want guaranteed
survival benefits at regular intervals along with long-term savings.
Key Features of LIC’s New Money Back Plan 25 Years
Here are the main features of Plan 721:
1. Policy Term
- Fixed
policy term of 25 years
2. Survival Benefits (Money Back)
- 15%
of Sum Assured after 5 years
- 15%
of Sum Assured after 10 years
- 15%
of Sum Assured after 15 years
- 15%
of Sum Assured after 20 years
3. Maturity Benefit
- 40%
of Sum Assured
- Plus
Accrued Simple Reversionary Bonus
- Plus
Final Additional Bonus (if applicable)
4. Death Benefit
- In
case of death during the policy term, the nominee receives:
- Sum
Assured on Death, plus
- Accrued
bonuses, irrespective of survival benefits already paid
5. Participating Plan
- Eligible
for annual bonuses declared by LIC
6. Loan Facility
- Loan
can be availed after the policy acquires surrender value
7. Tax Benefits
- Tax
deductions under Section 80C
- Tax-free
maturity and death benefits under Section 10(10D) (as per
prevailing tax laws)
Eligibility Criteria for LIC New Money Back Plan – 25
Years
Before purchasing the policy, check the eligibility
conditions:
Minimum Age at Entry
- 13
years
Maximum Age at Entry
- 50
years
Maximum Age at Maturity
- 75
years
Sum Assured
- Minimum:
₹1,00,000
- Maximum:
No upper limit (subject to LIC underwriting)
Premium Paying Term
- 20
years
Premium Payment Options
LIC provides flexible premium payment modes for the
convenience of policyholders:
- Yearly
- Half-Yearly
- Quarterly
- Monthly
(ECS / NACH)
The premium amount depends on:
- Age
of the policyholder
- Chosen
Sum Assured
- Premium
payment mode
Premiums are fixed and do not change during the
policy term.
Survival Benefits Explained (Money Back Structure)
One of the main attractions of this policy is its money
back feature.
Let us assume the Sum Assured is ₹10,00,000.
|
Policy Year |
Benefit |
|
End of 5th year |
₹1,50,000 |
|
End of 10th year |
₹1,50,000 |
|
End of 15th year |
₹1,50,000 |
|
End of 20th year |
₹1,50,000 |
|
At Maturity (25th year) |
₹4,00,000 + Bonus |
Total survival benefits before maturity = ₹6,00,000
These payouts can be used for:
- Children’s
education
- Business
needs
- Emergency
expenses
- Personal
financial goals
Death Benefit Under Plan 721
In case the life assured passes away during the policy term,
LIC pays the death benefit to the nominee.
Death Benefit Includes:
- Sum
Assured on Death, plus
- Accrued
Simple Reversionary Bonuses, plus
- Final
Additional Bonus (if any)
Important point:
Even if survival benefits have already been paid, LIC still pays the full
Sum Assured on Death.
This ensures strong financial protection for the family.
Bonuses in LIC New Money Back Plan
Since Plan 721 is a participating policy, it is
eligible for bonuses.
Types of Bonuses:
- Simple
Reversionary Bonus
- Declared
annually
- Added
to the policy value
- Final
Additional Bonus
- Paid
at maturity or death (subject to LIC rules)
Bonus rates are not guaranteed and depend on LIC’s
performance.
Maturity Benefit Explained
At the end of 25 years, the policyholder receives:
- 40%
of Sum Assured, plus
- Accrued
Bonuses, plus
- Final
Additional Bonus (if applicable)
This lump sum amount helps in:
- Retirement
planning
- Debt
repayment
- Long-term
wealth accumulation
Loan Facility in LIC New Money Back Plan
LIC allows policyholders to take a loan against the
policy after it acquires surrender value.
Key Points:
- Loan
amount depends on surrender value
- Interest
is charged by LIC
- Useful
during financial emergencies
Surrender Value of the Policy
If the policyholder decides to discontinue the policy:
- Surrender
value is available after paying premiums for at least 2 years
- LIC
pays Guaranteed Surrender Value or Special Surrender Value,
whichever is higher
However, surrendering early may lead to lower returns,
so long-term continuation is recommended.
Tax Benefits of LIC New Money Back Plan – 25 Years
Section 80C
- Premiums
paid are eligible for deduction up to ₹1.5 lakh per year
Section 10(10D)
- Maturity
amount and death benefits are tax-free, subject to prevailing
income tax rules
Always consult a tax advisor for updated tax provisions.
Who Should Buy LIC’s New Money Back Plan 25 Years?
This plan is suitable for:
- Salaried
individuals looking for safe long-term savings
- Parents
planning future expenses like education or marriage
- Investors
who prefer low-risk and guaranteed returns
- People
seeking regular cash flow + life insurance
- Conservative
investors not comfortable with market-linked plans
Who Should Avoid This Plan?
This plan may not be ideal for:
- Investors
seeking high returns
- Individuals
focused only on pure term insurance
- People
comfortable with market volatility (mutual funds, ULIPs)
LIC New Money Back Plan vs Term Insurance
|
Feature |
Money Back Plan |
Term Insurance |
|
Premium |
Higher |
Very Low |
|
Returns |
Moderate |
No returns |
|
Risk |
Low |
Low |
|
Survival Benefits |
Yes |
No |
|
Best For |
Savings + insurance |
Pure protection |
Advantages of LIC New Money Back Plan – 25 Years
- Trusted
government-backed insurer
- Guaranteed
periodic payouts
- Life
cover throughout policy term
- Tax
benefits
- Suitable
for conservative investors
Disadvantages to Consider
- Lower
returns compared to equity investments
- Long
policy commitment
- Not
suitable for aggressive wealth creation
Final Verdict: Is LIC New Money Back Plan 25 Years Worth
It?
LIC’s New Money Back Plan – 25 Years (Plan 721) is a safe,
reliable, and disciplined savings option for individuals who value
stability and regular returns over high risk.
It is best viewed as a financial planning tool, not a
high-return investment. If your goal is security, periodic income, and peace
of mind, this plan can be a suitable choice.
Before buying, always:
- Compare
with other LIC plans
- Assess
your financial goals
- Consult
a licensed LIC agent or financial advisor
Frequently Asked Questions (FAQs)
Q1. Is LIC New Money Back Plan 721 guaranteed?
The survival benefits and sum assured are guaranteed.
Bonuses depend on LIC’s performance.
Q2. Can I stop the policy in between?
Yes, but surrendering early may result in lower returns.
Q3. Is the maturity amount taxable?
Generally no, under Section 10(10D), subject to tax laws.
Q4. Can I take a loan on this policy?
Yes, after it acquires surrender value.
Disclaimer:
This article is for educational purposes only. Policy terms, benefits, and tax
rules are subject to change by LIC and the Government of India. Always verify
details from official LIC sources before purchasing.
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