Reliance Nippon Life Guaranteed Moneyback Plan: Good or Bad? An Enlightening Review

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Can the Reliance Nippon Life Guaranteed Moneyback Plan offer you peace of mind with guaranteed returns during key life stages?

Can the Reliance Nippon Life Guaranteed Moneyback Plan secure your family’s future while providing assured payouts over time?

Can the Reliance Nippon Life Guaranteed Moneyback Plan help you achieve your financial goals with its unique moneyback feature?

In this analysis, we’ll explore its features, advantages, drawbacks, and potential returns to determine if it aligns with your financial goals and needs.

What is the Reliance Nippon Life Guaranteed Moneyback Plan?

Reliance Nippon Life Guaranteed Money Back Plan is a Non-Linked, Non-Participating, Individual Savings Life Insurance Plan.

Reliance Nippon Life Guaranteed Money Back Plan not only helps you save for the future but also protects your savings in case of any unforeseen eventuality. All future premiums are waived and your family continues to fulfil their dreams, even in your absence.

What are the features of the Reliance Nippon Life Guaranteed Moneyback Plan?

Get life cover of at least 10 times the Annualized Premium for the entire policy term
Get an additional life cover equal to the Base Sum Assured in case of accidental death
In case of death, all future premiums are waived and Guaranteed Benefits continue
Choose your policy term: 15 or 20 years
Pay the premium for a limited period
Guaranteed Money Back during the last five policy years
Guaranteed Loyalty Additions up to 40% of Base Sum Assured at maturity
Get tax benefits on investment and on benefits, as per the applicable income tax law

Who is eligible for the Reliance Nippon Life Guaranteed Moneyback Plan?

Parameters	Minimum	Maximum
Policy term	15 years	20 years
Age at Entry	18 years	55 years
Age at Maturity	33 years	75 years
Sum Assured	₹ 1,20,000	No limit
Premium	₹ 12,000	No limit
Premium payment Mode	Yearly, Half-yearly, Quarterly and Monthly
Premium paying term	Policy term	Premium paying term
	15 years	5, 7, 10 years
	20 years	5, 7, 10, 15 years

What are the benefits of the Reliance Nippon Life Guaranteed Moneyback Plan?

1.) Money Back Benefits

Guaranteed Money Back Benefits as a percentage of the Base Sum Assured will be paid during the last five policy years as per the table given below, irrespective of survival of the Life Assured.

Policy term 15 years	Policy term 20 years	Money back benefits (as a percentage of Base Sum Assured)
End of 11th year	End of 16th year	15%
End of 12th year	End of 17th year	15%
End of 13th year	End of 18th year	15%
End of 14th year	End of 19th year	15%
End of 15th year	End of 20th year	40%

2.) Maturity Benefit

At the end of the Reliance Nippon Life Guaranteed Money Back Plan policy term, irrespective of survival of the Life Assured, the following two benefits will be paid:

Guaranteed Loyalty Additions: Guaranteed Loyalty Additions of 2% of Base Sum Assured will accrue at the end of every Reliance Nippon Life Guaranteed Money Back Plan policy year and will be paid on maturity, provided the policy is not lapsed or surrendered.

Guaranteed Maturity Addition: The Guaranteed Maturity Addition is expressed as a percentage of Base Sum Assured and depends on the Reliance Nippon Life Guaranteed Money Back Plan policy term.

For a 15-year policy term, it is 15% of the base sum assured and for a 20-year policy term, it is 20% of the base sum assured.

3.) Death benefit

In case of unfortunate demise of the Life Assured during the policy term, the nominee shall receive a lump sum death benefit, waiver of premium and Continuation of guaranteed benefits.

Lump sum death benefit is the higher of:

Sum Assured on Death
105% of Total Premiums Paid as of the date of death

In the event of death of the Life Assured on account of an accident on or before age 65, then an additional amount equal to the Base Sum Assured is receivable.

Where Sum Assured on Death is defined as higher than 10 times the Annualized Premium and Base Sum Assured under the Reliance Nippon Life Guaranteed Money Back plan.

Waiver of Premium:

On the death of the Life Assured, all future premiums under the plan will be waived.

Continuation of Guaranteed Benefits:

On the death of the Life Assured during the Reliance Nippon Life Guaranteed Money Back Plan policy term, the nominee will receive the Money Back Benefits and Maturity Benefits as scheduled after the date of death.

The nominee will not have an option to surrender the policy after the death of the Life Assured.

Grace period, Lapsed & Paid-up Policy and Revival of Reliance Nippon Life Guaranteed Moneyback Plan

Grace period

There is a grace period of 30 days applicable from the due date of payment of premiums if the premium payment frequency is yearly, half-yearly or quarterly. In case the premiums are paid in monthly frequency, then the grace period applicable is 15 days.

Lapsed Policy

If premiums are not paid in full for the first policy year, then the policy lapses at the end of the grace period and the insurance cover, inbuilt accidental death benefit, inbuilt waiver of premium benefit and rider benefits, if any, will cease immediately

Paid-up policy

The Reliance Nippon Life Guaranteed Money Back plan policy will acquire a paid-up status on discontinuance of premium payment provided the first policy year premium has been paid in full i.e., once the policy has acquired a surrender value.

On acquiring paid-up status, the benefits under the base plan will be reduced. Once the Reliance Nippon Life Guaranteed Money Back Plan policy acquires paid-up status, the inbuilt accidental death benefit will cease immediately.

Revival

A Reliance Nippon Life Guaranteed Money Back Plan policy in a lapsed or paid-up condition can be revived during the revival period of 5 years

Free Look Period for Reliance Nippon Life Guaranteed Moneyback Plan

In the event you disagree with any of the policy terms or conditions, you shall have the option to return the Reliance Nippon Life Guaranteed Money Back Plan policy to the company for cancellation within 30 days beginning from the date of receipt of the Policy Document, whether received electronically or otherwise.

Surrendering Reliance Nippon Life Guaranteed Moneyback Plan

The Reliance Nippon Life Guaranteed Money Back Plan shall acquire a Surrender Value after completion of the first policy year provided one full-year premium has been paid. The Surrender value payable is higher of the Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV).

What are the advantages of the Reliance Nippon Life Guaranteed Moneyback Plan?

You can take a loan of up to 70% of the policy’s surrender value.
Additional riders can be included to enhance coverage.
Waiver of premium benefit and accidental death benefit are in-built features.
Flexible premium payment options are available, allowing you to pay annually, semi-annually, quarterly, or monthly.

What are the disadvantages of the Reliance Nippon Life Guaranteed Moneyback Plan?

The life cover offered is inadequate.
Receiving the Guaranteed money-back benefit annually might lead to unnecessary spending.
The returns are relatively low.
The Guaranteed money-back benefit cannot be deferred or postponed, which may not suit your financial requirements.
Early withdrawals disrupt the compounding growth of your investments.

Research Methodology of Reliance Nippon Life Guaranteed Moneyback Plan

After reviewing its features and details, it’s crucial to assess the suitability of the plan. The Reliance Nippon Life Guaranteed Moneyback Plan provides guaranteed cash payouts during the last five years of the policy term, along with loyalty additions at maturity.

To gain a clearer view of the cash flow pattern and evaluate returns, let’s analyse a specific case and calculate the Internal Rate of Return (IRR).

Benefit Illustration – IRR Analysis of the Reliance Nippon Life Guaranteed Moneyback Plan

Consider a 30-year-old male who chooses the Reliance Nippon Life Guaranteed Moneyback Plan with a 20-year policy term and a base sum assured of ₹22,23,450. He pays an annual premium of ₹1,50,000 for 15 years.

Starting from the end of the 16th policy year, he receives 15% of the base sum assured annually. At maturity, he gets 40% of the base sum assured along with loyalty additions.

Male	30 years
Sum Assured	₹ 22,23,450
Policy Term	20 years
Premium Paying Term	15 years
Annualised Premium	₹ 1,50,000

		At 4% p.a.
Age	Year	Annualised premium / Maturity benefit	Death benefit
30	1	-1,50,000	22,23,450
31	2	-1,50,000	22,23,450
32	3	-1,50,000	22,23,450
33	4	-1,50,000	22,23,450
34	5	-1,50,000	22,23,450
35	6	-1,50,000	22,23,450
36	7	-1,50,000	22,23,450
37	8	-1,50,000	22,23,450
38	9	-1,50,000	22,23,450
39	10	-1,50,000	22,23,450
40	11	-1,50,000	22,23,450
41	12	-1,50,000	22,23,450
42	13	-1,50,000	22,23,450
43	14	-1,50,000	22,23,450
44	15	-1,50,000	22,23,450
45	16	0	22,23,450
46	17	3,33,531	22,23,450
47	18	3,33,531	22,23,450
48	19	3,33,531	22,23,450
49	20	3,33,531	22,23,450
50		22,23,837

	IRR	3.77%

The calculated IRR for this cash flow is 3.77% as per the Reliance Nippon Life Guaranteed Money Back Plan maturity calculator. While the plan offers guaranteed, regular payouts, the returns are underwhelming for investors.

Additionally, the periodic payouts may fall short of covering significant expenses and could lead to unnecessary spending. The life cover provided is also insufficient to secure the family’s long-term financial needs.

Given the low returns, rigid cash payouts, and inadequate life cover, the Reliance Nippon Life Guaranteed Moneyback Plan is not a suitable investment option.

Reliance Nippon Life Guaranteed Moneyback Plan Vs. Other Investments

The Reliance Nippon Life Guaranteed Moneyback Plan combines life insurance and investment, resulting in suboptimal returns. A more effective approach is to separate these components into two distinct products.

Let’s explore better alternatives that can offer both the same cash payouts and life cover as the Reliance Nippon Life Guaranteed Moneyback Plan.

Reliance Nippon Life Guaranteed Moneyback Plan Vs. Pure-term + PPF/ ELSS

Using the same metrics as the previous scenario, a pure-term life insurance policy with a sum assured of ₹22.50 lakhs would require an annual premium of ₹13,900 for a 20-year term, with premiums paid over 10 years. This leaves ₹1,36,100 annually available for investment.

Pure Term Life Insurance Policy
Sum Assured	₹ 22,50,000
Policy Term	20 years
Premium Paying Term	10 years
Annualised Premium	₹ 13,900
Investment	₹ 1,36,100

In the previous scenario, the premium paying term was 15 years, while here it is 10 years. For the first 10 years, after paying for life insurance, the remaining funds are invested. For the next 5 years, the entire ₹1.50 lakhs are utilised for investment.

Low-risk investors could choose debt instruments like the Public Provident Fund (PPF), while those willing to take more risk might opt for equity-based options such as Equity-Linked Savings Schemes (ELSS). For this analysis, both options are considered.

After 15 years, the accumulated corpus is shifted to an investment yielding 7% per annum, and annual withdrawals begin, mimicking the moneyback payouts from the Reliance Nippon Life Guaranteed Moneyback Plan. The remaining balance is fully withdrawn at maturity.

		Term Insurance + PPF		Term insurance + ELSS
Age	Year	Term Insurance premium + PPF	Death benefit	Term Insurance premium + ELSS	Death benefit
30	1	-1,50,000	22,50,000	-1,50,000	22,50,000
31	2	-1,50,000	22,50,000	-1,50,000	22,50,000
32	3	-1,50,000	22,50,000	-1,50,000	22,50,000
33	4	-1,50,000	22,50,000	-1,50,000	22,50,000
34	5	-1,50,000	22,50,000	-1,50,000	22,50,000
35	6	-1,50,000	22,50,000	-1,50,000	22,50,000
36	7	-1,50,000	22,50,000	-1,50,000	22,50,000
37	8	-1,50,000	22,50,000	-1,50,000	22,50,000
38	9	-1,50,000	22,50,000	-1,50,000	22,50,000
39	10	-1,50,000	22,50,000	-1,50,000	22,50,000
40	11	-1,50,000	22,50,000	-1,50,000	22,50,000
41	12	-1,50,000	22,50,000	-1,50,000	22,50,000
42	13	-1,50,000	22,50,000	-1,50,000	22,50,000
43	14	-1,50,000	22,50,000	-1,50,000	22,50,000
44	15	-1,50,000	22,50,000	-1,50,000	22,50,000
45	16	0	22,50,000	0	22,50,000
46	17	3,33,531	22,50,000	3,33,531	22,50,000
47	18	3,33,531	22,50,000	3,33,531	22,50,000
48	19	3,33,531	22,50,000	3,33,531	22,50,000
49	20	3,33,531	22,50,000	3,33,531	22,50,000
50		37,12,924		57,71,279

	IRR	6.48%		9.05%

The final PPF maturity value is ₹37.77 lakhs. This corpus is then invested in an instrument with a 7% return, enabling annual withdrawals. Afterwards, the remaining ₹37.12 lakhs is fully withdrawn. The IRR for this cash flow is 6.48%.

For ELSS, the pre-tax maturity value is ₹57.81 lakhs, and after capital gains tax, the post-tax value is ₹52.44 lakhs. This corpus is also shifted to an instrument with a 7% return, allowing for annual withdrawals. The remaining ₹57.71 lakhs is fully withdrawn. The IRR for this cash flow is 9.05%.

ELSS Tax Calculation
Maturity value after 15 years	57,81,523
Purchase price	13,61,000
Long-Term Capital Gains	44,20,523
Exemption limit	1,25,000
Taxable LTCG	42,95,523
Tax paid on LTCG	5,36,940
Maturity value after tax	52,44,582

This alternative strategy replicates the cash flow structure of the Reliance Nippon Life Guaranteed Moneyback Plan. However, you can customise the withdrawal as per your needs and if you avoid annual withdrawals, the returns could be even higher.

Ultimately, separating investments from life insurance proves to be a more effective strategy than relying on cash payouts from moneyback plans when planning for life goals.

Final Verdict on the Reliance Nippon Life Guaranteed Moneyback Plan

The Reliance Nippon Life Guaranteed Moneyback Plan offers liquidity in the last five years of the policy term, along with life coverage throughout the term.

While the annual cash payouts and loyalty additions at maturity are guaranteed, they may not align with your actual financial needs and could lead to unnecessary spending.

These payouts are inflexible and cannot be used for large expenses, which limits their utility. Combined with low returns, this makes the plan less attractive to investors and it also has a high agent commission.

Additionally, the sum assured is often inadequate to meet a family’s essential financial requirements. For these reasons, the Reliance Nippon Life Guaranteed Moneyback Plan proves to be a suboptimal choice.

Pure-term life insurance policies offer significantly higher coverage at much more affordable premiums. In contrast, moneyback plans provide insufficient life cover and payouts that often fail to address real financial needs, reducing their overall effectiveness.

It’s wiser to keep your investments separate rather than combining them with a money-back or traditional insurance plan.

When it comes to financial advice, are Quora, Facebook, and Twitter the final word?

To secure your future, focus on building an investment portfolio that suits your risk profile, life goals, and time horizon. For personalized advice, consider consulting a Certified Financial Planner who can help design a plan tailored to your unique financial objectives.

Reliance Nippon Life Guaranteed Moneyback Plan: Good or Bad? An Enlightening Review

Table of Contents:

What is the Reliance Nippon Life Guaranteed Moneyback Plan?

What are the features of the Reliance Nippon Life Guaranteed Moneyback Plan?

Who is eligible for the Reliance Nippon Life Guaranteed Moneyback Plan?