LIC New Money Back Plan 25 Years (Plan 721): Complete Guide
Secure your family's financial future with the LIC New Money Back Plan 25 Years. Discover benefits, eligibility, tax savings, and features. Get expert guidance today.
INSURANCE
Sundhari S Mahila Career Adviser – LIC Tindivanam
8/18/20268 min read
LIC New Money Back Plan 25 Years: The Complete Financial Security Guide
Introduction
In today’s fast-paced world, balancing short-term financial needs with long-term security is a priority for most Indian families. You want to protect your family against uncertainties while also keeping enough liquid cash for key life events such as children’s education, weddings, or starting a business. The LIC New Money Back Plan 25 Years can help meet that need.
This policy is a trusted option for family financial planning, combining life cover with guaranteed cash flows at regular intervals. Whether you are a salaried professional seeking disciplined savings, a parent planning for your child’s future, or a self-employed individual needing liquidity, this plan is designed to meet your evolving needs. In this guide, we will explore the features, benefits, and reasons why this plan stands out for Indian households.
What is the LIC New Money Back Plan 25 Years?
The LIC New Money Back Plan 25 Years (Plan 721) is a participating, non-linked, individual, life assurance savings plan. In simple terms, it is a traditional life insurance policy that gives you money back at regular intervals while keeping your life cover active for the entire policy term.
Purpose of the policy: To provide periodic lump-sum payouts during the policy term, a final maturity benefit, and life protection.
Type of plan: Traditional Money Back Endowment Plan.
Main features: 15% of the Basic Sum Assured is paid at the end of the 5th, 10th, 15th, and 20th years, leaving a 40% payout plus accumulated bonuses at maturity (25th year).
Who it is designed for: Individuals who want periodic cash flow without reducing their family’s life insurance protection.
Key Features
Understanding the core mechanics of your insurance policy is the first step toward sound financial planning. Here are the standout features of the plan and what they mean for you:
Life Cover: Provides financial protection to your family if the policyholder dies during the 25-year term.
Savings Element: Serves as a disciplined savings tool by requiring regular premium payments and providing cash inflows every 5 years.
Maturity Benefit: At the end of the 25-year term, you receive the remaining 40% of the sum assured along with vested simple reversionary bonuses and a final additional bonus, if any.
Bonus Eligibility: As a participating plan, it may earn bonuses based on LIC’s profits.
Premium Paying Term: You pay premiums for 20 years, but your cover and benefits continue for 25 years.
Loan Facility: You can take a loan against this policy after paying premiums for at least two full years, which can help during emergencies.
Surrender Value: You may get a guaranteed surrender value after two full years of premium payments. However, surrendering early often means a loss, so it is usually better to stay invested.
Revival Options: If your policy lapses because premiums are not paid, you can revive it within 5 years of the first unpaid premium.
Benefits of the Policy
Regular Income Stream (Survival Benefit)
You do not have to wait 25 years to see a return on your investment. You receive 15% of the Sum Assured at the end of the 5th, 10th, 15th, and 20th policy years, providing cash to cover midlife expenses.
Comprehensive Death Benefit
In the event of the policyholder's death, the nominee receives the "Sum Assured on Death" plus any accumulated bonuses. This death benefit is paid in full, regardless of any survival benefits already paid to the policyholder.
Limited Premium Payment
You pay premiums for only 20 years, but your life cover continues for the full 25-year term. This 5-year premium holiday can ease your financial burden as you approach retirement or other major life milestones.
Profit Sharing
Through Simple Reversionary Bonuses and a Final Additional Bonus, your investment grows over time, helping to support your long-term returns.
Eligibility Criteria
Before applying, it is important to check if you meet the basic eligibility criteria.
(Note: The Sum Assured is in multiples of ₹5,000.)
Premium Details
LIC makes it easier for policyholders from all walks of life to afford this policy by offering flexible premium payment options that fit different budgets.
Frequency: You can pay your premiums yearly, half-yearly, quarterly, or monthly (through NACH only). You can also pay through salary deductions.
Rebates: LIC offers rebates for choosing higher premium frequencies and for higher sum assured values, which can lower your effective cost.
Grace Period: A 30-day grace period is allowed for yearly, half-yearly, and quarterly modes, and a 15-day grace period for the monthly mode.
Policy Benefits Explained
Let's break down the exact benefits you and your family will receive:
Survival Benefit: If you survive to the end of the specified durations, LIC pays:
End of 5th Year: 15% of Basic Sum Assured
End of 10th Year: 15% of Basic Sum Assured
End of 15th Year: 15% of Basic Sum Assured
End of 20th Year: 15% of Basic Sum Assured
At the end of the 25th year, you receive the remaining 40% of the Basic Sum Assured. Additionally, you receive the accumulated Simple Reversionary Bonuses and the Final Additional Bonus, which can significantly increase your final payout.
Death Benefit: If the policyholder dies during the 25-year term, the nominee receives the "Sum Assured on Death." This is the higher of:
7 times the annualised premium.
The death benefit is guaranteed to be at least 105% of all premiums paid up to the date of death. Previously paid survival benefits are NOT deducted from the death benefit, so your nominee still receives the full death benefit amount.
Riders Available
To improve your coverage, you can add optional riders for a small additional premium. The LIC Money Back Plan 25 years riders and add-on covers include:
LIC’s Accidental Death and Disability Benefit Rider provides an additional lump sum in case of accidental death or waives future premiums and pays regular instalments in case of permanent disability.
LIC’s Accident Benefit Rider provides an extra sum assured only in the case of accidental death.
LIC’s New Term Assurance Rider provides additional life cover for your family.
LIC’s New Critical Illness Benefit Rider pays a lump sum if the policyholder is diagnosed with one of the 15 covered critical illnesses, helping manage major medical expenses.
Tax Benefits
One of the biggest attractions of this policy is that it can help you save on taxes.
The LIC Money Back Plan offers 25 years of tax benefits under Section 80C of the Income Tax Act, allowing you to claim deductions on the premiums paid up to ₹1.5 Lakhs per financial year.
The survival benefit, maturity benefit, and death benefit are generally tax-free under Section 10(10D) of the Income-tax Act, subject to specific conditions.
Note: Tax laws are subject to change. Please consult your financial advisor or CA for the latest updates.
How to Buy the Policy
Securing this policy is simple and hassle-free.
Buying through your LIC Advisor (Recommended)
Consultation: Contact a trusted advisor, such as Sundhari S (Mahila Career Advisor – LIC Tindivanam), to discuss your financial goals and learn how the policy can help you achieve them.
Customisation: The advisor will help you choose the right Sum Assured and explain the riders that fit your family’s needs and financial priorities.
Documentation: Submit your ID proof, Address Proof, Income Proof, and a Passport-sized photograph.
Medical Examination: Depending on your age and the chosen sum assured, a basic medical check-up may be required.
Policy Issuance: Once the premium is paid and approved, your policy bond is issued, and your coverage begins.
Real-Life Example & Maturity Calculator
To understand the LIC Money Back Plan 25-year maturity calculator in India, let’s look at a practical example:
Customer Profile: Ramesh, a 30-year-old salaried professional.
Basic Sum Assured Chosen: ₹10,00,000 (10 Lakhs)
Policy Term: 25 Years
Premium Paying Term: 20 Years
Expected Payouts:
End of Year 5: ₹1,50,000 (15%)
End of Year 10: ₹1,50,000 (15%)
End of Year 15: ₹1,50,000 (15%)
End of Year 20: ₹1,50,000 (15%)
End of Year 25 (Maturity): ₹4,00,000 (40%) + Accumulated Bonuses + Final Additional Bonus, giving Ramesh a clear long-term payout.
Maturity Calculator
Advantages and Limitations
When comparing the LIC Money Back Plan 25 years with other money back policies, it is important to weigh the pros and cons clearly.
Who Should Buy This Policy?
This plan is versatile and serves various segments of Indian society:
Salaried Employees: The LIC Money Back Plan 25 years for salaried employees serves as a forced savings tool that automatically deducts premiums, builds a safety net, offers tax savings, and provides periodic cash inflows.
Parents: Ideal for parents who have young children. The money-back payouts can perfectly align with the child’s higher education, college admission, or wedding expenses.
Self-Employed Individuals: Business owners who might need periodic liquid cash to inject back into their business or manage family events without taking high-interest loans.
Young Professionals: Starting this policy early locks in lower premiums and builds a solid foundation for long-term wealth creation and protection.
First-Time Insurance Buyers: By blending safety, life cover, and guaranteed returns, it provides peace of mind for beginners in financial planning.
Important Points to Consider Before Buying
To make the most of this policy, beware of the common LIC Money Back Plan 25-year investment mistakes to avoid:
Underinsuring: Ensure the Sum Assured is adequate to support your family's lifestyle and pay off debts if you are not around.
Ignoring Riders: Adding a critical illness or accidental rider costs very little but dramatically improves your safety net.
Premature Surrender: Life insurance is a long-term commitment. Surrendering the policy early results in financial loss due to strict surrender value rules.
Missing Premium Payments: Set up an auto-debit (NACH) mandate to avoid policy lapses and loss of cover.
Frequently Asked Questions
1. Is the death benefit reduced if survival benefits have already been paid?
No, the death benefit remains intact. Even if you have received one or more survival benefits, the full Death Benefit will be paid to the nominee.
2. Can I choose a different policy term?
Plan 721 has a fixed policy term of 25 years and a fixed premium-paying term of 20 years.
3. Are the returns on the LIC Money Back Plan guaranteed?
The survival benefits (15% of Sum Assured) and the maturity base (40% of Sum Assured) are fully guaranteed. However, the bonuses depend on LIC's annual profit declarations.
4. What happens if I stop paying premiums?
If you stop paying premiums after at least two full years of payments, the policy becomes "paid-up" with a reduced sum assured. If stopped before two years, the policy lapses and nothing is payable.
5. Can I get a loan against this policy?
Yes, after paying premiums for two full years, the policy acquires a surrender value, and you can avail of a loan against it at LIC's prevailing interest rates.
Conclusion
The LIC New Money Back Plan 25 Years (Plan 721) is much more than just a life insurance policy; it is a predictable, reliable financial companion. It provides a safety net for your family and offers guaranteed payouts every five years, aligning with the rhythm of an Indian family's milestone expenses. If you value financial discipline, guaranteed cash inflows, and absolute peace of mind, this policy is an excellent addition to your investment portfolio.
Secure Your Family's Future Today
Making the right choice in life insurance is a critical step in building a strong financial foundation. Every family’s needs are unique, and choosing the ideal Sum Assured and riders requires careful consideration.
If you want personalised advice, a detailed premium quotation, or assistance with any government schemes, I am here to help you navigate your options.
Sundhari S
Mahila Career Advisor – LIC Tindivanam
Nila Safe Life Solutions
Phone / WhatsApp: 9865822106
(Guiding you towards smart insurance solutions and comprehensive financial planning)
Disclaimer: The information provided in this article is for educational and informational purposes only. Insurance is a subject matter of solicitation. Please consult a qualified financial advisor or LIC expert to understand policy terms, conditions, and suitability before making any investment or purchasing insurance.
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