Reliance Nippon Life Guaranteed Moneyback Plan
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?
What are the features of the Reliance Nippon Life Guaranteed Moneyback Plan?
Who is eligible for the Reliance Nippon Life Guaranteed Moneyback Plan?
What are the benefits of the Reliance Nippon Life Guaranteed Moneyback Plan?
Grace period, Lapsed & Paid-up Policy and Revival of Reliance Nippon Life Guaranteed Moneyback Plan
Free Look Period for Reliance Nippon Life Guaranteed Moneyback Plan
Surrendering Reliance Nippon Life Guaranteed Moneyback Plan
What are the advantages of the Reliance Nippon Life Guaranteed Moneyback Plan?
What are the disadvantages of the Reliance Nippon Life Guaranteed Moneyback Plan?
Research Methodology of Reliance Nippon Life Guaranteed Moneyback Plan
Benefit Illustration – IRR Analysis of the Reliance Nippon Life Guaranteed Moneyback Plan
Reliance Nippon Life Guaranteed Moneyback Plan Vs. Other Investments
Reliance Nippon Life Guaranteed Moneyback Plan Vs. Pure-term + PPF/ ELSS
Final Verdict on 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.
| 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 | |
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% |
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.
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:
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.
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.
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.
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
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.
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
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.
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).
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).
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.
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.
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.
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.
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