An Overview on Term Insurance Maturity Benefits

  | Published: 15 April 2020 | Last Updated On: 20 July 2021

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Buying a term insurance plan is essential in order to safeguard your family member’s future in an event of your untimely demise that leads to a loss of income. Though you cannot put a financial value on the life of a human and also this void can never be filled and, the indemnity amount is decided depending on the future income’s loss. This is the main reason why the term “sum assured” refereed as sum assured amount that the dependents of the insured will get in an absence of the policyholder.

However, there is a possibility that the insured outlives the tenure of the term insurance policy and nothing unforeseen event takes place. Will the life insurance company pay insured back the premium that they have paid over the years? What about the other life goals the policyholder wants to achieve such as their children’s higher education, marriage, house, repayment of mortgages, or any other financial goals. Does it mean there is no payback if the insured outlives the policy term?

Well yes, it may seem quite weird paying premiums for a term insurance plan that does not offer you maturity benefits. But if you look at the key features and benefits of this policy, you will see that term insurance plans offer you a considerably high sum assured on an affordable premium cost that most of the other life insurance plans don’t. Furthermore, the addition of other riders to your basic term insurance plan maximizes your coverage and makes the plan more effective.

There is no maturity benefit under the traditional term insurance plan. But, if you want to avail more benefits on your insurance policy, then you can opt for other life insurance plans with maturity benefits. Many of the people don’t know about the additional advantages of the life insurance policy, they only have an idea of death benefits.

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So, read this article further to know how you can avail benefit after maturity of life insurance plan.

What is the Maturity Benefit?

A maturity benefit is basically a lump sum amount the insurer pays you post the maturity of your life insurance plan. This simply means that if your life insurance plan is for a term of 20 years then the insured will receive a pay-out after these 20 years as a maturity benefit. Well, this amount includes the premiums that you have made over the years for your insurance policy and a bonus as well. However, you only receive these maturity benefits if you have paid all premiums & complete the tenure of the policy.

Types of Life Insurance with Maturity Plans

Term Insurance with Return of Premium (TROP) Plans

TROP is another form of term insurance plan that provides financial protection to the insured’s family members in an event of his/her untimely demise. However, there is one key feature of this type of life insurance policy that makes it different from the basic term plan. Basically, the sum of paid premiums is returned along with some interest to the insured at the end of the policy term if in case he/she survives the tenure of the policy.

Endowment Plans

This type of life insurance plan with maturity benefit is basically a combination of insurance and investment. A part of the premium is generally invested in debt funds so returns from such plans are not too much high but it comes at a much-lower risk. The earnings from these funds are basically clubbed on to your sum assured & offered to your dependents in an event of your untimely demise.

Unit Linked Insurance Plans (ULIPs)

ULIPs are somewhat similar to an endowment plan but a part of the premium is invested in financial products that offer the investor the advantage of insurance as well as investment. Because ULIPs are a market-linked financial product, the risk is higher as compared to other life insurance plans. However, such kinds of insurance plans provide insured equity exposure that significantly grows their financial health at a much higher rate of return. In addition to this, such kind of plans also allow to insured to make partial withdrawals of their invested money that can be utilized to meet different financial requirements as and when they arise.

Note: All of the above-mentioned insurance plans are a type of life insurance plan that helps you get your investment or premiums back at the end of the policy term. And they are unlike a basic term insurance plan that only offers death risk coverage and the premiums paid to an insurer don’t come back to you if in case you outlive the policy term.

Benefits of Life Insurance with Maturity Benefits

There are plenty of benefits which life insurance plan with maturity benefits provide and some of them are as follows:

Death Benefit

Just like a traditional term insurance plan, all of these aforementioned life insurance plans offer you a death benefit. This means the return of the sum assured to the beneficiaries will be given by the life insurance company if the policyholder dies during the policy tenure.

Maturity Benefit

Majority of the term life insurance maturity concludes when the policyholder dies during the tenure of the policy and a traditional term insurance plan doesn’t offer any payout at maturity. But you can avail maturity benefits on other life insurance plans such as TROP if the insured survives the policy term.

Additional Riders or Covers

You also have an option to add riders to your basic term insurance plan in order to maximize your coverage. One can purchase riders such as Critical illness rider, accidental death rider, waiver of premium rider, income benefit rider, etc. However, this differs from insurance company to company as well as the life insurance policy chosen.

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The Bottom Line

So, life insurance is not just limited to provide financial protection to your family in your absence but it can be more than that. If you want to avail maturity benefits, then you can opt for a term insurance plan with return of premium, endowment plan, or Unit-linked insurance plan as per your financial requirement. Opting for any of these insurance plans will offer financial support to you as well as your family members.