I have a money back policy from LIC on which I pay Rs 25,000 every year as premium and get back Rs 75,000 every five years. I want to know if the money that I get back this way is taxable or not?- Punithraj
Money Back plans are similar to endowment insurance plans where the policy provides for partial survival benefits during the term of the policy. Typically in a 20-year money back plan, 20 per cent of the sum assured is payable at the end of the 5th, 10th and 15th year of the policy with the remaining 40 per cent including accrued benefits on maturity. An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which have already been paid. The periodic lump sums as well as maturity amount is tax free.
This article was originally published on August 22, 2011.
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