Simplifying Life Insurance in India

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Difference Between Maturity Benefit and Death Benefit Explained

Life insurance serves a dual purpose, offering financial protection not only in the event of death but also upon policy maturity.

Each one of us might have different objective while investing insurance. While those looking for just life insurance coverage will prefer policies with death benefits, others looking for savings may look for policies offering maturity benefits too.

Understanding the distinctions between maturity benefits and death benefits is vital in making well-informed decisions about your insurance coverage. Let’s explore the fundamental differences between maturity benefits and death benefits, ensuring that you have a comprehensive grasp of your insurance policy's multifaceted advantages.

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What is Maturity Benefit?

A maturity benefit is the accumulated amount that a life insurance provider pays the policyholder if he/she survives the policy term. For example, if you have an insurance policy with a 15-year term, you will get a payout from this insurance after the policy matures.

Besides the sum assured, a life insurance policy can offer money back for the premiums you paid over the policy term and bonuses. This includes any guaranteed payments and terminal bonuses. However, you can only enjoy these insurance benefits after payment of all your instalments and completion of the term.

Some life insurance policies, including endowment plan and ULIPs, also have an investment component. Thus, maturity benefits can turn regular life insurance into saving instruments.

What Is a Death Benefit?

The death benefit is the sum assured by an insurance company to a beneficiary in case of unforeseen demise of an insured individual during the policy’s tenure. This is also one of a life insurance policy's most essential roles or advantages.

A death benefit provides a payout in lumpsum or regular income form, depending on the terms chosen by the policyholder when purchasing a policy. It is usually paid out within 30 days of filing a claim which ensures that the respective family does not face any financial crisis.

What are the Differences Between Maturity Benefits and Death Benefits?

The 5 main differences between maturity benefit vs death benefit are:

Parameter	Maturity Benefit	Death Benefit
Trigger Event	It is paid after the maturity of an insurance policy.	It is paid after the death of the insured person.
Who receives it	A maturity benefit is receivable by the insured person.	A death benefit is receivable by the beneficiary chosen by the insured person.
Mode of pay out	It might be paid out in lump sum or regular payouts, as mentioned in terms of a policy.	It is usually paid out to the beneficiary in a lump sum.
Applicability of bonuses	Bonuses applicable	No bonuses
Purpose	Typically used for long term financial goals, retirement, or wealth accumulation	Death benefit’s primary purpose if to provide immediate financial support to the dependent family in case of the policyholder’s death.
Policy Continuation	The policy terminates after the maturity benefit is paid	The policy, in certain kinds of plans as in child plans, may continue after the payment of death benefit.

Now that you know the difference between maturity benefit and death benefit, you can choose a life insurance policy that best suits your financial needs. It is evident that maturity benefits are paid after a policy's maturity, while death benefits are paid to a beneficiary after the demise of an insured person. While term plans provide only death benefit, other life insurance policies come with both these benefits, which are useful and user-friendly.

Frequently Asked Questions

What is the Difference Between a Death Claim and a Maturity Claim?

A death claim is an amount a beneficiary claims from an insurance company upon the policyholder’s unforeseen demise. On the contrary, a maturity claim is an amount that a policyholder claims from an insurance company after a policy’s maturity.

What Happens After the Maturity of an Insurance Policy?

After an insurance policy matures, the insurance provider will verify your information and send the maturity benefit to your bank account. Most insurers send a policy release form at least a month before the maturity of an insurance policy. This form will need the signature of two witnesses before any further procedure.

What is the Tax Deduction Available on Insurance Premiums?

The premium paid towards a life insurance policy is eligible for tax deduction under Section 80C and the payouts are tax free under section 10(10D). However, the tax benefits are governed by the prevailing tax laws.

What life insurance companies provide Maturity Benefits in India?

Several life insurance companies in India offer policies with maturity benefits, such as endowment plans, whole life policies, and ULIPs. These plans provide both life cover and a lump sum payout upon maturity, ensuring financial security and savings growth for policyholders.

Do term insurance companies provide maturity benefits?

Most term insurance companies offer pure protection plans with only death benefits. However, some variants like Term Return of Premium (TROP) return the premiums paid if the policyholder survives the term. Regular term plans do not provide maturity benefits, making them cheaper than traditional life insurance policies.

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