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What is Maturity Benefit in Insurance?
Source: tomorrowmakers.com
Maturity benefit is an attractive feature of insurance policies that can bestow you with immense rewards. However, there are only some selected plans that offer this benefit. So, keep reading to know what maturity benefit is, the different policies that possess this feature and the advantages that it offers.
This will help you to select an appropriate plan for securing the financial health of your family.
What is Maturity Benefit in Term Life Insurance?
In life insurance policies, maturity benefit refers to the amount that you receive from an insurance company after the completion of the policy term. For instance, if a policy term is of 20 years, then you can receive this amount after 20 years. This amount includes the premiums that you have paid along with bonuses that you earn during this term.
It is essential to complete paying all the premiums by the end of the policy duration to receive the money. However, if you meet any unfortunate situation before completing the policy duration, your family can benefit from the death benefit feature of the insurance policy. This implies that your beneficiary can claim this amount to extend financial protection to your entire family in your absence.
Once you have a clear idea about what maturity benefit in insurance is, you can proceed to explore the policies that offer them. There are several types of life insurance policies having maturity benefit features that you can purchase for financial protection.
What are the Types of Maturity Benefit Insurance Policies?
Endowment Plans
Under this plan, you can get both insurance and investment options with a single premium. On maturity of these plans, the beneficiary will receive a death benefit on sum assured and the bonuses. However, if you outlive the maturity period, you will be able to receive the maturity amount.
You can get fixed returns from this plan even though they are not as extensive as ULIPs. The reason for this is that the money is invested in debt funds that are not very volatile. Hence, the risk involved is comparatively lower than that of ULIP.
Term Insurance With Return Of Premiums (TROP)
According to this policy, if the insured outlives the plan duration, then he or she is handed over the premiums on its maturity as a benefit. However, if the policyholder passes away before the end of the term, their nominee will get the sum assured and death benefit.
Term insurance is a popular choice as the premiums are low and involve negligible risks. Moreover, you have the flexibility to add necessary riders according to your lifestyle requirements. Nonetheless, the basic term plan is solely an insurance policy, so it does not give you any returns.
Unit-Linked Insurance Plans (ULIPs)
This plan offers you the opportunity for both investment and insurance under the same premium. A part of this money is kept aside for insurance, and the rest is invested in money market funds. These funds generally include equity funds, debt funds and balanced funds.
Since equity funds are highly volatile, they are a high-risk investment, even though the returns are extensive. This plan generally has a lock-in period of 5 years, after which you can make partial withdrawals in case of financial emergencies.
There are several advantages of purchasing an insurance policy with maturity benefits that you must know.
What are the Advantages of Insurance with Maturity Benefits?
The advantages of buying an insurance policy with maturity benefits are as follows:
Easily affordable: Term plans are quite affordable and do not disrupt your budget.
Low financial risk: Term plans and endowment plans do not involve significant financial risks.
Wealth creation: Endowment policy and ULIPs serve as investment options and aid in wealth creation.
Additional benefits: You can get death benefits on your policy with maturity benefit.
Highly flexible: The policies are flexible in nature, and hence you can choose the premiums, policy terms, and payout option according to your convenience.
Financial protection: They act as a safety net for your family in case of your sudden demise.
Returns and bonuses: Along with risk protection, you can also get guaranteed returns and bonuses.
Availability of riders: You can select essential riders to customise your plan and maximise the benefits.
Now that you know what maturity benefit is and how it can reward you, select a policy that offers this benefit. This way, you can profit the most from your insurance policy.
FAQs about Maturity Benefits in Life Insurance
Is there a tax benefit on maturity benefits?
What is the age limit for purchasing policies with maturity benefits?
How can you claim the maturity amount?
You can follow the steps below to raise a claim for the maturity amount:
Step 1: Fill out the policy release form.
Step 2: Request two witnesses to sign the form.
Step 3: Submit the form and essential documents to the insurer.
Once done, the insurance company will verify insurance details and deposit the money into your bank account.
Important Guides Related to Life Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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