Everything You Should Know About LIC Policy Plans for Money Back

Posted by va financial services on April 22nd, 2019

Most of us want to invest in a traditional life insurance policy for an extended period to create a guaranteed corpus. However, we have a problem when we need funds before the end of the mandate. A financial crisis could happen at any time and we need funds to deal with it.

But a traditional life insurance policy is useless if the mandate of the plan does not end. We can use a loan, but it can be limited in quantity. What to do? Is there a plan that pays the lump sum benefits during the stay of the plan?

Yes, there is. A cash repayment plan resolves the liquidity problem during the term of the LIC policy plans for money back by regularly paying a percentage of the sum insured through holding the plan. We understand the plan in detail.

What is a money back policy?

As the name suggests, a money back policy is a policy that returns money at regular intervals. This repayment of money is paid during the stay of the plan and is a percentage of the sum insured. Repayment payments are called survival benefits. These benefits are paid over the life of the plan and, at maturity the remaining sum insured is paid with purchased bonds.

However, if the insured person dies during the stay of the plan, the total amount insured is paid regardless of the survival benefits already paid. This is what makes the plan unique. Some of the salient features of the refund policy are:

Survival benefits are calculated as a percentage of the sum insured

The survival benefits are paid at regular intervals during the stay of the LIC policy plans for money back. There is a fixed interval at which the benefits would be paid. Each floor has a different payment structure. Similarly, the percentage of the sum insured paid as a survival advantage is not fixed and varies between different plans.

If the plan expires, the remainder of the sum insured (the actual sum insured less the survival benefits already paid) benefit is paid as due. However, in the event of death, the entire sum insured is paid regardless of the reimbursement benefits already paid.

Money repayment plans generally come as participation plans where bonuses are added. The accumulated bonus is paid upon expiration or death.

How does money back work?

The examples always provide a clear understanding of how an insurance plan works. So here's a simple illustration showing how a refund policy works:

Example: Mira buys a repayment plan for an insured sum of lakhs Rs.10. You choose a term of 25 years and pay regular premiums for the duration of the policy.

The plan promises survival benefits at 20% of the sum insured after every 5 years of the plan. At maturity, 20% of the sum insured is paid together with the accumulated bonuses.