In the world of insurance, term insurance has been the oldest and most basic form, valued for providing essential life coverage.

However, with changing times and investors looking at more comprehensive investments, a new dimension has emerged with term plans offering maturity benefits.

Now, term plans come with the added advantage of maturity benefits, providing a financial cushion for policyholders who outlive the policy term.

Let's go through the details about term insurance with maturity benefits and how it can redefine your long-term financial security.

A term insurance with maturity benefits is essentially a term insurance that goes beyond the traditional feature of just death cover.

In addition to the death cover, these policies also offer a savings component to policyholders who survive the policy term. Upon maturity, a lump-sum amount is disbursed to the policyholder, serving as a valuable financial asset.

This innovative approach to traditional term insurance combines the security of insurance with the advantage of savings, thus adding an extra layer of financial planning and security. 

Term plan with maturity benefits combines the security of insurance coverage and the benefit of savings with maturity payout. 

Here is how a term plan with maturity benefits works:

For example, let’s consider, Mr. Rajeev, a 30-year-old man, buys a term plan with maturity benefits for a sum assured of 50 lacs. He is in his healthy years, has no medical history and no smoking or alcohol habits.

He buys this term plan for 30 years, for which the annual premium payable is ₹15000/-.

Now, let’s see the two scenarios that might happen during the tenure of the policy:

• Mr Rajeev passes away during the tenure: In this case, the nominee receives the death benefit, i.e., ₹50 lacs. 
• Mr Rajeev survives the policy term: In this case, on maturity, Mr. Rajeev will receive the maturity benefit, i.e., the total of all premiums, which is ₹4,50,000/-

Let’s look at some of the most essential features and advantages of term insurance with maturity benefits:

1. Financial Security

The most important feature of a term plan is its financial coverage. Thus, in case of an unfortunate demise of the policyholder, the dependent family receives the death benefit that ensures the family’s financial stability. 

2. Maturity Benefits

Unlike the traditional term policies, these policies provide a maturity benefit. This maturity benefit is the total of all premiums paid throughout the policy term.

Thus, if a policyholder survives the policy term, they receive back their investment, thus making this kind of plan a popular investment choice among people looking for financial coverage and potential savings.

3. Paid Up Option

Most of these policies offer a paid-up option. If the policyholder cannot continue paying premiums and the policy has attained a paid-up status, the policy continues with reduced benefits.

This is a very useful feature for cases when there are adverse financial circumstances, and the policyholder still wants to maintain some coverage but can no longer afford to pay the premiums.

4. Flexible Payout Options

Not everyone can manage a lumpsum payout. Suppose a policyholder feels that their dependents wouldn’t be able to manage the lump sum payout in a judicious manner. In that case, they can opt for periodic payment of the maturity benefits, which serves as an income replacement.

5. Surrender Value

As with all other insurance plans with a savings component, these term plans with maturity benefits also provide a surrender benefit.

In cases where the policyholder needs to discontinue their policy before its maturity for any reason, they can surrender it and receive a specific surrender value.

This value depends on the number of premiums paid and the policy duration.

6. Riders

Riders can be attached to the base policy for enhanced and customised coverage, addressing specific needs like critical illness or disability.

7. Tax Benefit

The premium paid towards term plans with maturity benefits is tax-free under section 80C, and the benefits received are tax-free under section 10(10D), thus ensuring that the dependents receive complete policy benefits without any tax liability.

However, the tax benefits depend on the prevailing tax norms.

When it comes to investment decisions, each of us has different priorities based on our life goals and financial situations. Our health, age, lifestyle, source of income, liabilities and dependents affect these decisions.

Hence, each of us might have a different reason to buy insurance coverage. Some of the most common groups of people who can buy term insurance with maturity benefits are: 

1. Unmarried

As an unmarried person, you might still have your parents' dependent on you, especially if they are retired or nearing retirement.

A term plan provides a financial cushion for them in case of your unfortunate death. If you survive the policy term, you have accumulated a corpus for yourself at a comparatively young age. 

2. Married with Children

Parents carry an enormous financial responsibility for their children’s present and future. Apart from the current lifestyle, they also need to build savings for their future, viz., higher education, wedding, and other financial goals.

Even if your spouse earns, you must secure your share of finances with a term policy.

Term Insurance with maturity benefits can help in achieving the primary life goals for yourself as well as your children. If you survive the term, you also get the maturity benefit that you can use for your retirement years. 

3. Married without Children

Even if there is no responsibility for children yet, you still carry a responsibility towards your spouse, earning or not. Not to forget, parents also.

A term plan at any stage of life builds up a monetary backup for your dependents. The maturity benefit at the end of the policy term adds up to your future savings.