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Lic Money Back Policy 20 Years Calculator

Reviewed by Calculator Editorial Team

Understand how LIC Money Back Policy works and calculate your potential returns over 20 years with our comprehensive calculator. This policy offers regular maturity benefits and partial withdrawals, making it a popular choice for long-term savings.

How LIC Money Back Policy Works

A LIC Money Back Policy is a type of life insurance policy that provides both protection and savings benefits. It combines the features of a savings plan with life insurance coverage, offering policyholders regular maturity benefits and partial withdrawals.

Key Features

  • Regular maturity benefits (monthly, quarterly, or yearly)
  • Partial withdrawals allowed
  • Life insurance coverage
  • Tax benefits under Section 80C of the Income Tax Act

Policy Structure

The policy typically has a term of 15 to 20 years, divided into multiple stages. Each stage has a specific maturity benefit and surrender value. The policyholder can choose to receive maturity benefits at the end of each stage or opt for partial withdrawals.

LIC Money Back Policies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and must comply with the Insurance Act, 1938.

Formula and Assumptions

The calculator uses the following formula to estimate the maturity value of a LIC Money Back Policy:

Maturity Value = (Sum Assured × (1 + Annual Interest Rate)^n) - (Sum Assured × n)

Where:

  • Sum Assured = The amount of life insurance coverage
  • Annual Interest Rate = The assumed annual interest rate (typically 4-5%)
  • n = Number of years (20 in this case)

Assumptions

  • The policy is held for the full 20 years without any withdrawals
  • The annual interest rate remains constant throughout the policy term
  • No additional premiums are paid beyond the initial sum assured
  • No lapses or cancellations occur during the policy term

Worked Example

Let's calculate the maturity value for a LIC Money Back Policy with the following details:

  • Sum Assured: ₹500,000
  • Annual Interest Rate: 4.5%
  • Policy Term: 20 years
Maturity Value = (500,000 × (1 + 0.045)^20) - (500,000 × 20) Maturity Value = (500,000 × 1.998) - 10,000,000 Maturity Value = 999,000 - 10,000,000 Maturity Value = ₹999,000

In this example, the estimated maturity value after 20 years is ₹999,000. This represents the total amount you would receive at the end of the policy term, including the sum assured and the accumulated interest.

Frequently Asked Questions

What is the difference between LIC Money Back Policy and Endowment Policy?
A Money Back Policy provides regular maturity benefits and partial withdrawals, while an Endowment Policy offers a lump sum at maturity with no partial withdrawals. Money Back Policies are more flexible for long-term savings.
Can I withdraw money from a LIC Money Back Policy before maturity?
Yes, you can make partial withdrawals during the policy term, but the amount will be deducted from the sum assured and the maturity benefits will be reduced accordingly.
Are LIC Money Back Policies tax-exempt?
Yes, premiums paid under Section 80C of the Income Tax Act are tax-exempt up to ₹1.5 lakh per year. The maturity benefits are also tax-free.
What happens if I die during the policy term?
The sum assured will be paid to the nominee, and the accumulated maturity benefits will also be paid out. The policy provides both protection and savings benefits.
How do I choose the right LIC Money Back Policy?
Consider factors like policy term, sum assured, premium payment term, and the frequency of maturity benefits. Use our calculator to estimate potential returns and compare different policies.