Lic Money Back Policy Return Calculator

A LIC Money Back Policy is a type of life insurance policy that provides both life cover and a savings component. This calculator helps you estimate your potential returns from such a policy based on your investment amount, policy term, and expected interest rate.

What is a LIC Money Back Policy?

A LIC Money Back Policy is a financial product offered by Life Insurance Corporation of India (LIC) that combines life insurance coverage with a savings component. It's designed to provide financial security to policyholders while also offering a guaranteed return on their premiums.

The policy typically has two main benefits:

Life Cover: A sum assured that is paid to the nominee in case of the policyholder's death during the policy term.
Maturity Benefit: A lump sum amount that is paid to the policyholder at the end of the policy term, which is typically higher than the total premiums paid.

LIC Money Back Policies are popular among Indian investors because they offer tax benefits under Section 80C of the Income Tax Act, allowing policyholders to claim deductions on their premium payments.

How to Use This Calculator

Using our LIC Money Back Policy Return Calculator is simple. Just follow these steps:

Enter the Policy Term in years (e.g., 20 years).
Enter the Annual Premium amount in your local currency (e.g., ₹5,000).
Enter the Expected Interest Rate (e.g., 5%).
Click the Calculate button to see your estimated returns.

The calculator will display your estimated maturity amount and the total amount paid as premiums.

How LIC Money Back Policy Works

LIC Money Back Policies work by combining life insurance coverage with a savings component. Here's how it works:

Premium Payments

Policyholders pay regular premiums (usually annually) throughout the policy term. These premiums are invested by the insurance company.

Investment Growth

The insurance company invests the premiums in various financial instruments, and the returns from these investments are credited to the policyholder's account.

Maturity Benefit

At the end of the policy term, the policyholder receives a lump sum amount known as the maturity benefit. This amount is typically higher than the total premiums paid.

Life Cover

If the policyholder passes away during the policy term, the nominee receives the sum assured as a death benefit.

Formula and Calculation

The estimated maturity amount (M) of a LIC Money Back Policy can be calculated using the following formula:

M = P × [((1 + r)^n - 1) / r]

Where:

P = Annual Premium
r = Annual Interest Rate (in decimal)
n = Policy Term (in years)

This formula calculates the future value of a series of payments made at regular intervals, assuming a constant interest rate.

Note: The actual maturity amount may vary slightly from the calculated value due to factors like policy fees, expenses, and investment performance.

Example Calculation

Let's say you want to calculate the maturity amount for a LIC Money Back Policy with the following details:

Policy Term: 20 years
Annual Premium: ₹5,000
Expected Interest Rate: 5%

Using the formula:

M = 5,000 × [((1 + 0.05)^20 - 1) / 0.05]

M = 5,000 × [((1.05)^20 - 1) / 0.05]

M = 5,000 × [(1.05^20 - 1) / 0.05]

M = 5,000 × [(2.6533 - 1) / 0.05]

M = 5,000 × [1.6533 / 0.05]

M = 5,000 × 33.066

M = ₹165,330

So, the estimated maturity amount for this policy would be ₹165,330.

Frequently Asked Questions

What is the difference between a LIC Money Back Policy and a Term Insurance Policy?

A LIC Money Back Policy provides both life cover and a savings component, while a Term Insurance Policy only provides life cover. The Money Back Policy offers a maturity benefit at the end of the policy term, which is not available in a Term Insurance Policy.

Are LIC Money Back Policies tax-exempt?

Yes, premiums paid on LIC Money Back Policies are eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum of ₹1.5 lakh per financial year.

Can I withdraw money from a LIC Money Back Policy?

Most LIC Money Back Policies do not allow partial withdrawals. However, some policies may offer partial withdrawals under certain conditions. It's best to check the policy terms and conditions or consult with a financial advisor.

What happens if I stop paying premiums on a LIC Money Back Policy?

If you stop paying premiums, the policy will lapse, and you will lose the life cover and any savings accumulated. The insurance company may also charge a surrender value or exit load.