LIC Money Back Plans 820 and 821: Which One Should You Choose?

LIC offers two money-back plans — Plan 820 (20-year term) and Plan 821 (25-year term) — that return a portion of the Sum Assured every few years as survival benefits. Many of my clients in Gorakhpur prefer these plans because they receive money at regular intervals, not just at the end.

**How money-back plans work**

Unlike endowment plans where you receive everything at maturity, money-back plans pay a percentage of the Sum Assured at regular intervals during the policy term. These periodic payments are called Survival Benefits.

The life cover remains at the full Sum Assured throughout the term, even after you have received survival benefit instalments. This is an important distinction — if you receive Rs 2 lakh as survival benefit in year 5, and then die in year 8, your nominee still receives the full Sum Assured of Rs 10 lakh, not Rs 8 lakh.

**LIC Plan 820 — 20-Year Money Back**

Under this plan, you receive: - 20% of Sum Assured after 5 years - 20% of Sum Assured after 10 years - 20% of Sum Assured after 15 years - 40% of Sum Assured + bonuses at maturity (year 20)

Total survival benefit payments: 60% of Sum Assured during the term, plus 40% at maturity with bonuses. The total payout well exceeds the Sum Assured due to accumulated bonuses.

**LIC Plan 821 — 25-Year Money Back**

Under this plan: - 15% of Sum Assured after 5 years - 15% of Sum Assured after 10 years - 15% of Sum Assured after 15 years - 15% of Sum Assured after 20 years - 40% of Sum Assured + bonuses at maturity (year 25)

Total survival benefits: 60% paid out in 4 instalments, plus 40% with bonuses at maturity.

**Who benefits from money-back plans**

I recommend these plans to clients who have regular milestone expenses. For example, a family with a child aged 5 who takes a 20-year money-back plan will receive a survival benefit in year 5 (when the child is 10), year 10 (age 15), and year 15 (age 20 — college fees). The maturity amount arrives when the parents are around 50 to 55 and can serve as a retirement corpus or children's marriage fund.

**Comparison with pure endowment**

Money-back plans have slightly lower IRR than endowment plans because LIC pays out money earlier. If you do not need intermediate liquidity, an endowment plan is marginally more efficient. But if your financial life has natural milestone needs, the periodic payouts from Plan 820 or 821 are genuinely useful.

**Premium range**

For Plan 820 with a Rs 10 lakh Sum Assured for a 35-year-old, the annual premium is approximately Rs 64,000. This is higher than a plain endowment for the same Sum Assured because the money-back feature carries an additional cost.

**Loan against policy**

You can take a loan after 3 years. The loan amount depends on the policy's surrender value at that point.

If you want to understand exactly when you would receive money under either plan and what the total payout looks like against the total premium paid, call me at 9415313434. I will prepare a year-by-year cash flow table specific to your Sum Assured and age.