Calculators LIC plans New Money Back — 20 Years Review
LIC New Money Back Plan - 20 Years (Plan 720) is a participating money-back plan with a 20-year policy term and a 15-year premium paying term. It pays 20% of the basic sum assured (BSA) as a survival benefit at the end of years 5, 10, and 15 — returning 60% of the BSA during the term — then pays the residual 40% of BSA plus full simple reversionary bonuses (accrued on the entire original BSA throughout) and a final additional bonus at maturity. For a 30-year-old buying ₹5 lakh BSA, the base-scenario XIRR across all cashflows is approximately 5–6%. Crucially, the death benefit is the full sum assured (max of 125% BSA or 7× annualised premium) plus vested bonuses, regardless of how many survival benefits have already been paid.
A 28–40 year old with specific upcoming liquidity needs at 5-year intervals (e.g., children's education at age 5, 10, 15 of the policy) and who values the forced-savings discipline of an annual premium commitment. The 15-year PPT means premiums stop 5 years before maturity — a genuine convenience if income is expected to decline in later years. Best suited for moderate-to-conservative savers who find the simplicity of guaranteed money-back payments reassuring.
Anyone who can maintain investment discipline without an insurance wrapper — a monthly SIP in a debt fund or balanced fund over 15 years will almost certainly deliver a higher real XIRR after tax. The intermediate SBs are also a double-edged sword: if you spend them on discretionary items rather than reinvesting, your effective money-weighted return collapses. Anyone with purely a death-cover requirement should use term insurance instead.
SRB declarations are not guaranteed — LIC reviews them annually after the actuarial valuation. At the pessimistic scenario (SRB ×0.75), the XIRR drops into the 4–4.5% range. Surrendering before year 3 returns less than total premiums paid. The three SBs received during the term are not separately investable unless you have a high-return deployment plan for each tranche.
Our headline XIRR uses the middle premium-paying term (15 years against a 21-year policy term), excludes optional rider premiums from the cash-flow base, and assumes the latest declared simple reversionary bonus rate holds for the full term. Try other PPTs and bonus assumptions on the New Money Back — 20 Years calculator.
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