LIC New Money Back Plan 720: Features, Benefits, and Major Modifications

In alignment with the IRDAI (Insurance Products) Regulations, 2024, and the IRDAI Master Circular on Life Insurance Products, the Life Insurance Corporation of India (LIC) has introduced a revised version of its New Money Back Plan-20 Years.

The previous plan, identified as Plan No. 920 with Unique Identification Number (UIN) 512N280V02, has been officially withdrawn effective October 1, 2024. The modified plan, known as LIC New Money Back Plan-20 Years, has been assigned Plan No. 720 and will carry the UIN 512N280V03.

Available for new business starting November 18, 2024, this updated policy reflects regulatory adjustments and enhances benefits to cater to evolving financial needs. For all interactions, documentation, and policyholder communications, this new UIN (512N280V03) will serve as the reference, ensuring clear identification of the revised plan across distribution channels and user engagements.

Also see: LIC launched 4 new plans, LIC agents are facing problems due to change in Rules

Introduction of LIC New Money Back Plan 720

The LIC New Money Back Plan 720 is a traditional, non-linked, participating insurance policy designed to offer both protection and regular returns. The plan provides survival benefits at regular intervals, along with maturity and life coverage. Recent modifications have enhanced the policy’s structure and benefits, making it even more attractive for policyholders.

Also see: LIC 4 New Upcoming Plans in November 18 2024

Major Modifications of LIC New Money Back Plan 720

This policy stands out for several reasons, including flexible terms, periodic survival benefits, and a maturity payout. The recent modifications to LIC New Money Back Plan 720 introduce significant updates in sum assured, surrender value, premium rates, loan options, and optional riders, enhancing the overall value of the plan. Here’s a detailed look at the policy latest modifications:

1. Revised Minimum Basic Sum Assured

• Updated Minimum: The minimum Basic Sum Assured has been increased from Rs. 1,00,000 to Rs. 2,00,000. This change reflects LIC’s commitment to provide greater financial protection to policyholders and ensures a substantial minimum payout.

2. Revised Premium Rates

• Updated Premium Structure: The premium rates for this plan have been revised to reflect changes in the coverage and benefits structure. These updated rates provide a balance between affordability and enhanced benefits for policyholders, ensuring value for money.

Also see: LIC Revised Jeevan Amar Plan 955

3. Enhanced Surrender Value and Paid-Up Benefits

• Faster Surrender Value Accumulation: The policy will now acquire a Surrender Value after the completion of the first policy year if at least one full year’s premium has been paid. This is an improvement over the previous requirement of two years’ premium, giving policyholders quicker access to liquidity.

• Paid-Up Policy Benefits: Once a full year’s premium has been paid, the policy will become “paid-up” if no further premiums are paid, offering policyholders flexibility in maintaining their policy status.

• Policy Loan Availability: Loans against the policy can now be availed upon the completion of one full policy year, providing greater flexibility for policyholders who may need access to funds.

4. Revised Death Benefit Under Paid-Up Policy

• Increased Minimum Death Benefit: The death benefit under a paid-up policy has been modified to ensure that it will not be less than 105% of the total premiums paid up to the date of death, adding a layer of assurance for policyholders’ families.

5. Modified Loan Quantum

• Loan Amount Adjustment: The loan amount available against the policy’s surrender value has been modified to a specific percentage of the Surrender Value, increasing flexibility in the amount that policyholders can borrow based on their needs.

Also see: LIC Jeevan Utsav Plan 771

6. Updated Optional Rider Benefits

The plan offers optional riders for enhanced coverage. However, several changes have been made in the rider options, which are as follows:

Modified Riders Available:

1. LIC Accidental Death & Disability Benefit Rider
2. LIC Accident Benefit Rider
3. LIC New Term Assurance Rider

• Unavailable Rider: LIC New Critical Illness Benefit Rider is no longer available under this plan, reducing the rider options from four to three.

• Revised Rider Sum Assured: The maximum sum assured under LIC Accident Benefit Rider is now capped at three times the Basic Sum Assured of the base policy, as opposed to the previous limit of the Basic Sum Assured alone.

• Life Insurance Rider Premium Cap: The premiums for all life insurance riders combined cannot exceed 30% of the base policy premium. Previously, the premium cap was set at 100% for certain riders like the Accident Benefit Rider and New Critical Illness Benefit Rider.

Also see: LIC Bima Shree Plan 748

7. Extended Free Look Period

• 30-Day Free Look Period: The Free Look Period has been extended to 30 days from the date of receipt of the Policy Bond in either electronic or physical form. This is an increase from the previous 15-day period, giving policyholders more time to review and understand their policy details.

8. Customized Benefit Illustration

• Revised Benefit Illustration: The Benefit Illustration has been customized to reflect the revised premium rates and benefits, providing greater transparency. This illustration helps policyholders understand the potential returns and overall benefits of the policy.

9. Modified Commission and Remuneration for Agents

• Agent Commission Structure: The commission or remuneration payable to LIC agents and other intermediaries has been updated (details specified in Para 10 of the official documentation), aligning with the new plan structure.

10. Additional Policy Documentation

• Inclusion of Customer Information Sheet and Need Analysis Document: A Customer Information Sheet and a Need Analysis document now form part of the Policy Document, providing a clearer overview of the policyholder’s suitability assessment. This addition ensures that policyholders have access to essential information regarding their purchase and can make well-informed decisions.

Also see: LIC Bima Jyoti Plan 760

Eligibility Conditions for LIC New Money Back Plan 720

Age and Entry Requirements:

• Minimum Age at Entry: 13 years (completed)
• Maximum Age at Entry: 50 years (nearest birthday)
• Maximum Maturity Age: 70 years (nearest birthday)

Policy Term and Premium Paying Term (PPT):

• Policy Term: 20 years
• Premium Paying Term: 15 years

Also see: LIC New Jeevan Shanti Plan 758

Basic Sum Assured:

• Minimum Basic Sum Assured: ₹2,00,000
• Maximum Basic Sum Assured: No limit
• Increments: The Basic Sum Assured must be in multiples of ₹25,000.

Age Calculation

• Age at Entry: Calculated based on the nearest birthday, except for the minimum age requirement of 13 years (completed).

Risk Commencement:

• Commencement of Risk: Risk coverage begins immediately upon policy issuance. The “Date of Issuance of Policy” is when the proposal, once underwritten and accepted, becomes an active contract.

Vesting Date (Applicable for Minors):

If the Life Assured is under 18 years at policy commencement, the policy will vest in the Life Assured upon reaching 18 years of age. If no written request for surrender is received before this date, the policy automatically transfers ownership to the Life Assured on the policy anniversary coinciding with or following their 18th birthday. At this point, the Life Assured gains absolute ownership of the policy, and any previous ownership interest by the proposer or their estate ceases.

Also see: LIC Index Plus and LIC Nivesh Plus Plan 749

Benefits under LIC New Money Back Plan 720

1. Death Benefit:

If the life assured passes away during the policy term, the death benefit includes the “Sum Assured on Death” plus any vested Simple Reversionary bonuses and Final Additional bonus (if applicable).

The “Sum Assured on Death” is calculated as the higher of either:

• 125% of the Basic Sum Assured, or
• 7 times the Annualized Premium.

The total death benefit is always at least 105% of the total premiums paid until the date of death.

2. Survival Benefit:

The plan provides periodic payouts, where 20% of the Basic Sum Assured is paid on survival at the end of each specified term interval, namely the 5th, 10th, and 15th policy years.

3. Maturity Benefit:

At the end of the policy term, if the life assured survives, a maturity benefit is paid. This includes the “Sum Assured on Maturity,” which is 40% of the Basic Sum Assured, along with any accrued Simple Reversionary bonuses and Final Additional bonus (if applicable).

Also see: How RBI Monetary Policy Could Affect LIC Pension Plan Annuity Rates

4. Participation in Profits:

The policy participates in LIC’s profits and may receive Simple Reversionary Bonuses, which are declared annually if the policy is in force. These bonuses become part of the guaranteed benefits.

Upon policy surrender, a surrender value for vested bonuses may be payable.

A Final (Additional) bonus may be granted upon the policy’s maturity or in case of death claims, based on LIC’s performance and terms outlined by the Corporation.

5. Tax Benefits

Under the prevailing income tax laws, the LIC New Money Back Plan 720 qualifies for tax benefits on premiums paid under Section 80C and on the maturity and death benefits under Section 10(10D). These benefits make the policy an attractive option for those seeking tax savings.

6. Loan

• Loan Against Policy: The policyholder can take out a loan against the policy once a minimum number of premiums have been paid, providing liquidity during emergencies.

7. Surrender Options

• Surrender Value: A policyholder can surrender the policy after a certain number of premiums have been paid. The surrender value is determined based on the premiums paid, less applicable

Also see: LIC Jeevan Tarun Plan 734

Optional Rider Benefits

The LIC New Money Back Plan 720 offers riders that enhance coverage. These riders include:

• Accidental Death and Disability Rider: Provides additional financial support in case of accidental death or disability.
• Term Assurance Rider: Boosts the life cover amount, offering a higher payout to the nominee upon the policyholder’s demise.
• Critical Illness Rider: Provides a lump sum payout upon diagnosis of critical illnesses, enabling the policyholder to manage treatment costs effectively.

Exclusions

The policy contains certain exclusions, notably related to suicide within the first year of the policy start date. Specific conditions may apply to the riders and the bonus structure, affecting the payout amounts under certain circumstances.

Conclusion

The LIC New Money Back Plan 720 is ideal for policyholders looking for life insurance coverage coupled with periodic payouts and maturity benefits. This plan’s flexibility in policy term options, premium payment modes, and bonus eligibility provides a well-rounded solution for long-term financial planning. As a result, LIC New Money Back Plan 720 stands as a robust option for those seeking a steady income with the assurance of life cover and tax benefits.

FAQs

Disclaimer: This article provides an overview of the LIC New Money Back Plan 720 for informational purposes only. It is not financial advice. Terms, benefits, and eligibility criteria may vary, and policyholders should consult the official LIC policy document or a licensed advisor to understand the full details, conditions, and exclusions before making any decisions.