Introduction: What If Your Insurance Paid You Back Along the Way?
Most people think of life insurance as a one-way street — you pay in for years, and the payout only ever reaches your family after you're gone. But what if your policy could hand you cash in your hands every five years, while you're still very much alive to enjoy it? That's the entire premise behind LIC's New Money Back Plan 20 Years, and it's exactly why this plan keeps resurfacing in conversations among salaried professionals, young parents, and anyone who wants their insurance premium to feel a little less like a black hole.
At CreditLogic, we've reviewed dozens of LIC products, and one thing we always tell our readers is this: don't buy an insurance plan because it sounds good in a WhatsApp forward — buy it because you actually understand the mechanics behind the payouts. So today, we're taking LIC's Plan 720 apart, piece by piece, and putting it back together in language that actually makes sense. By the time you finish reading, you'll know exactly what this policy pays, when it pays, and whether it deserves a spot in your 2026 financial plan.
Let's get started.
What Is LIC's New Money Back Plan 20 Years?
LIC's New Money Back Plan 20 Years, registered as Plan No. 720, is a participating, non-linked, limited-premium life insurance policy. It belongs to a distinct category of LIC products known as "money-back plans," which differ from standard endowment plans in one crucial way: instead of waiting until maturity for a single lump sum, the policyholder receives a series of periodic survival benefit payouts throughout the policy term, in addition to the life cover.
Plan 720 is essentially the current successor to the earlier Plan 820, following the standard practice at LIC of periodically renumbering and refreshing its product lineup. The core mechanics, however, remain rooted in the same money-back philosophy that has made this category popular for decades: liquidity during your lifetime, combined with full protection for your family in case something happens along the way.
How the Plan Structure Works
Here's where the "20 Years" in the plan's name becomes important. While the total policy term runs for a full 20 years, you're only required to pay premiums for 15 years. This means the final five years of the policy operate as a premium-free period — your cover, your bonus accumulation, and your remaining benefits all continue uninterrupted, without you paying a single additional rupee. It's one of the more underrated advantages of this plan, and it materially improves the effective return on every premium rupee you've already put in.
The payout structure itself is built around fixed milestones:
- 20% of the Basic Sum Assured is paid out as a survival benefit at the end of the 5th policy year
- Another 20% of the Basic Sum Assured is paid out at the end of the 10th policy year
- A further 20% of the Basic Sum Assured is paid out at the end of the 15th policy year
- At maturity (end of the 20th year), the policyholder receives the remaining 40% of the Basic Sum Assured, plus all vested bonuses and a Final Additional Bonus, if declared
Add it all up, and by the time the policy runs its full course, the total guaranteed component — 20% + 20% + 20% + 40% — equals exactly 100% of the Basic Sum Assured, layered on top with whatever bonuses LIC has declared along the way.
Death Benefit: Full Protection, No Matter What's Already Been Paid
One of the most reassuring aspects of this plan is how the death benefit is structured. If the life assured passes away at any point during the policy term — even after some survival benefits have already been paid out — the nominee still receives the full Sum Assured on Death, along with all vested bonuses and the Final Additional Bonus if applicable. None of the previously paid survival benefits are deducted from this amount.
The Sum Assured on Death is generally calculated as the higher of 125% of the Basic Sum Assured or a multiple of the annualized premium (commonly cited around 7 times), subject to an overall minimum equal to 105% of the total premiums paid up to the date of death. In practical terms, this ensures a family is never left with a payout smaller than what was actually invested into the policy, regardless of when the unfortunate event occurs.
Eligibility Conditions
Plan 720 is designed with fairly broad accessibility in mind. The minimum entry age typically starts around 13 years, extending up to the mid-to-late 40s, since the total policy term of 20 years must be completed by a defined maximum maturity age. The minimum Basic Sum Assured generally begins at ₹1,00,000, with no upper cap, making the plan scalable for both modest first-time buyers and those seeking substantial coverage.
Premium: What Should You Expect to Pay?
Premiums for this plan depend on your age at entry, your chosen Basic Sum Assured, and your premium payment mode (yearly, half-yearly, quarterly, or monthly). As an illustration, a 30-year-old opting for a ₹2,00,000 Basic Sum Assured might expect an annual premium in the range of roughly ₹15,000, though this figure moves depending on rebates for higher sum assured amounts and the payment frequency selected.
It's also worth factoring in GST, which is typically applied at around 4.5% in the first policy year and roughly 2.25% from the second year onward. This means the number quoted as your "base premium" isn't always your final outgo — always check the GST-inclusive figure before budgeting.
Maturity Benefit: Bringing It All Together
Using that same ₹2,00,000 Basic Sum Assured example: a policyholder would receive ₹40,000 (20%) at the end of years 5, 10, and 15 respectively, and then ₹80,000 (the remaining 40%) at maturity in year 20 — plus whatever Simple Reversionary Bonuses and Final Additional Bonus have accumulated by that point. Since bonus rates fluctuate based on LIC's actual yearly performance and are never guaranteed in advance, the final maturity figure should always be treated as an estimate rather than a fixed promise, and it's worth running your specific numbers through an official LIC calculator before finalizing your budget expectations.
Riders and Add-Ons
Policyholders can enhance their base coverage with optional riders such as the Accidental Death and Disability Benefit Rider, available for an additional premium. This can be a valuable addition for individuals in professions or lifestyles with elevated accidental risk, since it provides an extra payout on top of the standard death benefit under qualifying circumstances.
Loan Facility and Liquidity
A notable practical feature of Plan 720 is its loan facility, which typically becomes available after a couple of years of premium payment, allowing policyholders to borrow against the policy's surrender value in case of a financial emergency — without having to fully surrender or discontinue the plan. Combined with the periodic survival benefits already built into the structure, this gives the plan a genuine edge in liquidity compared to policies where funds remain completely locked in until maturity.
Tax Benefits
Premiums paid toward Plan 720 are generally eligible for deduction under Section 80C of the Income Tax Act, while the survival benefits, maturity benefit, and death benefit are typically tax-exempt under Section 10(10D), provided the policy meets the applicable conditions under prevailing tax law. As tax regulations can be revised over time, it's wise to reconfirm the current rules closer to the time you actually receive any payout.
Money-Back Plan vs. Pure Endowment: Which Suits You Better?
It's worth pausing here to compare Plan 720 against a standard endowment plan, since the two often get confused. A pure endowment plan holds your entire payout until maturity, allowing your money to compound within the policy for the full duration. A money-back plan like 720, by contrast, periodically releases a portion of your sum assured back to you every few years — which is fantastic for liquidity and short-term goals like funding a child's school admission or a family event, but it does mean less capital compounds inside the policy over time compared to a pure endowment structure.
Neither is inherently superior; the right choice depends on whether you value periodic access to cash more than you value maximizing the compounding bonus growth within the policy.
Quick Comparison Table
Final Thoughts
LIC's New Money Back Plan 20 Years earns its popularity honestly — it solves a real problem that many families face: needing both long-term protection and periodic access to cash without disrupting their broader savings strategy. The five-year milestone payouts make it a natural fit for anyone planning around recurring life expenses, while the full death benefit guarantee ensures your family's protection is never diminished by benefits you've already received.
As with every LIC product, the real numbers matter more than the general structure. Run your specific age, sum assured, and premium mode through an official calculator before committing, so your expectations are grounded in your own financial reality rather than a generic example.
Thank you for reading, and here's to making 2026 the year your insurance plan works as hard for you as you work for it — brought to you by CreditLogic.
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