LIC New Money Back Plan 20 Years (Plan 720) - Overview
LIC New Money Back Plan 20 Years (Plan No. 720) is a participating life insurance plan that combines periodic returns (money-back benefits) with life insurance protection. It is designed for individuals who want regular income during the policy term along with a substantial lump sum at the end.
Key Features at a Glance
| Plan Number | 720 |
|---|
| Plan Type | Participating, Limited Premium, Money-Back |
|---|
| Minimum Age at Entry | 13 years (completed) |
|---|
| Maximum Age at Entry | 50 years (last birthday) |
|---|
| Maximum Maturity Age | 70 years |
|---|
| Policy Term | 20 years (fixed) |
|---|
| Premium Paying Term (PPT) | 15 years |
|---|
| Minimum Sum Assured | ₹2,00,000 |
|---|
| Maximum Sum Assured | No upper limit |
|---|
| Premium Modes Available | Yearly, Half-Yearly, Quarterly, Monthly (SSS) |
|---|
| Loan Available | Yes, after policy acquires surrender value |
|---|
| Tax Benefits | Premium under 80C, Maturity under 10(10D) |
|---|
Survival Benefits (Money Back Payouts)
Plan 720 pays you a fixed percentage of the Sum Assured at three points during the policy term:
| Survival Benefit Payout | When (Policy Year) | % of Sum Assured |
|---|
| 1st Money Back | End of Year 5 | 20% |
| 2nd Money Back | End of Year 10 | 20% |
| 3rd Money Back | End of Year 15 | 20% |
| Total Survival Payouts | By end of Year 15 | 60% of SA |
Maturity Benefit
On survival till the end of the 20-year policy term, the policyholder receives:
- 40% of Basic Sum Assured, plus
- Accrued Simple Reversionary Bonus (declared annually by LIC, calculated per ₹1,000 Sum Assured per year for the full 20-year term), plus
- Final Addition Bonus (FAB), if applicable (paid for long-term policies).
Death Benefit
In case of unfortunate death of the life assured during the policy term, the nominee receives:
- Full Sum Assured (irrespective of any survival benefits already paid), plus
- Accrued bonuses till the date of death, plus
- FAB (if applicable).
This ensures the family gets the full protection amount even if the policyholder passed away after receiving one or two money-back payouts.
Premium Calculation Example
Let's say Rakesh, age 25, buys LIC Plan 720 with a Sum Assured of ₹5,00,000 and yearly premium mode.
| Parameter | Value |
|---|
| Sum Assured | ₹5,00,000 |
| Policy Term | 20 years |
| Premium Paying Term (PPT) | 15 years |
| Approx. Yearly Premium (before GST) | ~₹39,500 |
| GST @ 18% | ~₹7,110 |
| Total Yearly Premium | ~₹46,610 |
| Total Premiums Paid (over 15 years) | ~₹6,99,150 |
| 1st Money Back (Year 5) | ₹1,00,000 |
| 2nd Money Back (Year 10) | ₹1,00,000 |
| 3rd Money Back (Year 15) | ₹1,00,000 |
| Maturity (Year 20): 40% SA + Bonus + FAB | ~₹2,00,000 + ~₹4,60,000 + ~₹47,500 = ~₹7,07,500 |
| Total Benefits Received (over 20 years) | ~₹10,07,500 |
Optional Riders Available
- Accidental Death and Disability Benefit (AD&DB) Rider — additional payout in case of death or total permanent disability due to accident.
- New Term Assurance Rider — extra term life cover for a small additional premium. Useful if you need more life cover than the base plan provides.
- Premium Waiver Benefit (PWB) Rider — future premiums are waived if the policyholder becomes totally disabled due to accident or critical illness (as per rider terms).
Who Should Buy LIC Plan 720?
LIC New Money Back 20 Years is well-suited for:
- Parents who want periodic payouts to fund children's education or marriage (the 5/10/15-year payouts align well with major milestones).
- Salaried individuals who prefer a limited premium paying term (15 years) but full 20-year policy benefits.
- Conservative investors who value guaranteed returns and life cover over higher-but-volatile market-linked returns.
- Those who need forced discipline in long-term savings for goals 15-20 years away.
Pros and Cons
✅ Advantages
- Guaranteed periodic money-back payouts.
- Limited premium payment (15 years) but full 20-year benefits.
- Life cover throughout the policy term.
- Bonus and FAB add to the final maturity value.
- Tax-free maturity under Section 10(10D).
- Loan facility available after surrender value is acquired.
❌ Limitations
- Returns (CAGR) are typically 3-4% p.a. — below equity mutual funds.
- Lower liquidity — significant penalty if surrendered in early years.
- No flexibility to increase SA mid-term (you'd need to buy an additional policy).
- Bonus rates can change every year — final maturity is not fixed.
- Long lock-in of 20 years.
Plan 720 vs Plan 721
| Feature | Plan 720 (20 Years) | Plan 721 (25 Years) |
|---|
| Policy Term | 20 years | 25 years |
| PPT | 15 years | 20 years |
| Survival Payouts | 20% at 5, 10, 15 years (60% total) | 15% at 5, 10, 15, 20 years (60% total) |
| Maturity Payout | 40% SA + Bonus + FAB | 40% SA + Bonus + FAB |
| Min Age at Entry | 13 years | 13 years |
| Max Age at Entry | 50 years | 45 years |
| Best For | Mid-term goals (15-20 yrs) | Long-term goals (20-25 yrs) |
Frequently Asked Questions
Is Plan 720 still available in 2026?
Yes, Plan 720 is a regular, currently-selling LIC plan. You can buy it through an authorised LIC agent, on the LIC website, or via the LIC app.
How is the premium for Plan 720 calculated?
The premium is based on your age at entry, the Sum Assured chosen, and the premium payment mode. Use the calculator on this page for an instant estimate, or check the official LIC premium calculator on lic.in.
What happens if I stop paying premiums after a few years?
If you stop paying premiums, the policy may lapse. If you have paid at least 3 full years' premiums, the policy can acquire a paid-up value. You can also revive a lapsed policy within the revival period (usually 5 years) by paying arrears with interest.
Is the money-back amount taxable?
No. Survival benefits (money-back payouts) are tax-free under Section 10(10D) of the Income Tax Act, provided the premium-to-Sum-Assured ratio is met.
Can I take a loan on Plan 720?
Yes, after the policy acquires surrender value (usually after 3 years), you can take a loan of up to 80-90% of the surrender value at an interest rate set by LIC (currently ~9-10% p.a.).
Related Tools & Plans
