Term Insurance Plan with Maturity Benefits in India

What is a Term Insurance with Maturity Benefits?

How Does Term Plan with Maturity Benefits Work?

Do All Term Insurance Plans Have Maturity Benefits?

Features and Benefits of Term Insurance with Maturity Benefits

How to Choose the Right Term Plan with Maturity Benefits?

Who Should Buy a Term Insurance with Maturity Benefits?

Difference Between Term Plan with Maturity Benefits and Pure Term Plan

Point of Difference Pure Term Plan Term Plan with Maturity Benefit
Insurance Claim Benefit A pure term plan provides only death benefit. Term plan with maturity benefit provides death cover in case of death during the term and in case of survival, it pays back all the premiums paid.
Premium The premium of pure term plan is lowest in the industry as compared to any other type of insurance. Usually, 0.1% of the sum assured The premium in this case is comparatively higher, usually 2-3 times more than that of pure term plans.
Investment Objective Suited for investors whose primary aim is to provide a high financial security to their dependents with a high sum assured. More suited for people who are looking to have an optimum balance between financial protection and savings.
Surrender Value No surrender value as there is no savings component here. Provides surrender benefit after a minimum period when the policy has attained a surrender value.

Why You Should Consider Buying Term Insurance Despite No Maturity Benefits?

FAQs about Term Plan with Maturity Benefits

Can a term plan premium change during the tenure of the policy?

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Usually, it doesn’t. But it can change if a lifestyle declaration changes, such as smoking or any addition of riders.

Is the death of a policyholder covered even if they die outside India?

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Yes, most term insurance policies cover the death of a policyholder even if they die outside India. However, it’s essential to check your policy's specific terms and conditions, as some insurers may have exclusions or require additional documentation. Always review your policy details.

Are there any disadvantages of a term plan with maturity benefit?

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Yes, term plans with maturity benefits often have higher premiums than pure term plans. Additionally, the maturity benefit might be lower than the total premiums paid, and the investment returns may be lower than other investment options. Besides, inflation diminishes the value of the maturity benefit over time. Always compare and consider your financial goals.

Can you get your money back from term insurance on maturity?

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Yes, you can get your money back from certain term insurance plans on maturity. These are known as term insurance with return of premium (TROP). If you outlive the policy term, the insurer will pay back the total annualised premiums you paid, excluding taxes.

Is it advisable to purchase term insurance with a maturity benefit?

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Purchasing term insurance with maturity benefits can be a good option for those prioritising protection and savings. These policies offer a death benefit to your loved ones in case of your untimely demise, as well as lump-sum payments upon policy maturity.

Do all term insurance plans include maturity benefits?

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No, not all term insurance plans include maturity benefits. Only term plans with return of premium options offer maturity benefits.

What are the main features of term insurance with maturity benefits?

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Term insurance with maturity benefits combines protection (death benefit) with savings. Premiums are higher, and investment options may vary. Consider your financial goals before choosing the policy.

Does a term insurance plan offer maturity benefits?

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A pure term insurance plan typically does not offer maturity benefits. It provides coverage for a specified term, and no benefits are paid out if the policyholder survives the term. However, some term plans with return of premium (TROP) offer maturity benefits by returning the premiums paid if the policyholder outlives the term.

What happens when a term insurance policy matures?

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When a pure term insurance policy matures, the coverage ends, and no benefits are paid if the policyholder is still alive. In the case of a term plan with a return of premium, the premiums paid during the policy term are returned to the policyholder upon maturity.

Is there a way to get money back in term insurance after maturity?

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Yes, term plans with return of premium (TROP) offer a way to get money back after maturity. These plans return the premiums the policyholder pays if they survive the policy term, providing a form of maturity benefit.

What is the difference between a pure term insurance plan and a term plan with maturity benefits?

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A pure term insurance plan offers only death benefits, providing financial protection to the policyholder’s beneficiaries if they pass away during the policy term. In contrast, a term plan with maturity benefits, such as TROP, returns the premiums paid if the policyholder survives the term, offering savings and life coverage.

Are the term insurance maturity benefits taxable?

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The maturity benefits of term insurance with return of premium (TROP) are generally tax-free under Section 10(10D) of the Income Tax Act, provided the premium paid does not exceed 10% of the sum assured. However, tax laws are subject to change, so it’s advisable to consult a tax professional for the latest information.

What is the grace period in the term plan with a return of premium?

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The grace period in a term plan with a return of premium is the additional time given to the policyholder to pay the premium after the due date without losing coverage. This period typically ranges from 15 to 30 days, depending on the insurer’s terms and conditions.

Can I add ridеrs to tеrm insurancе policy with maturity bеnеfits with add-ons?

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Yes, you can usually add riders to a term insurance policy with maturity benefits. Common riders include critical illness, accidental death, and waiver of premium. These riders enhance the coverage by providing additional benefits for specific situations.

Can I claim thе maturity bеnеfits aftеr thе waiting pеriod?

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Maturity benefits of term insurance with return of premium are payable at the end of the policy term, not after a waiting period. The waiting period generally applies to claims for specific riders or benefits, such as critical illness coverage, rather than the maturity benefits.

Disclaimer

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  • 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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