Basic guide to understanding term insurance maturity benefits

Choosing the best term life insurance in India is quite important to protect your loved ones in case of unfortunate and untoward events such as death, accident, or impairment that can result in loss of income. Though the value of human life cannot be quantified in monetary terms, this is why the insurance company estimates the compensatory sum using the potential loss of future income. This is why the term “sum assured” refers to the guaranteed sum that the policyholder’s family will receive if the life insured unfortunately passes away. When deciding on choosing the best term life insurance in India for yourself and your family, you should examine the maturity benefits. In this article, you will get to know everything there is to know about the benefits of maturity, the benefits of a policy, and how to get maturity proceeds.

Do term insurance plans come with Maturity?

A term insurance policy is a pure protection plan that provides the insured with life insurance cover and pays a sum assured (which the policyholder has already chosen at the time of application) to the policyholder’s family if he or she, unfortunately, passes away during the policy period. This lump sum death benefit can help the family cope with financial difficulties, maintain their preferred way of living, and pay for regular expenses and liabilities as well as future life goals your family has. 

However, one must know that general-term insurance plans do not provide maturity benefits and only pay the death benefit in the case of the insured person’s untimely death during the policy period. If the policyholder has selected the appropriate riders, lump sum payouts are also available in the event of critical or fatal illnesses.

However, there is a type of term insurance known as Term Plans with Return of Premium (TROP) plans, which provide a maturity benefit equal to the total premiums paid. This lump sum payment is provided when the insured person survives the policy term.

What Is Maturity in TROP?

The maturity benefit is a lump-sum payment provided by the insurance company when the policy has reached its expiration date. It simply means that if your insurance policy has a 15-year term, you, the insured, will receive a maturity amount that refers to the sum of the premiums paid up to that point plus any additional benefits at the end of those 15 years. The policyholder is only eligible for this if they have paid all of their premiums and completed the term. Furthermore, a maturity benefit policy also covers the risk of mortality. It protects your family’s future in the event of an accident that results in the death of the insured.

Key Features of Term Insurance Plans with Maturity Benefits

A term insurance plan with maturity benefits has a few key aspects:

Entry age: The average age for purchasing best term life insurance in India with maturity benefits is typically 18-65 years old.

Premium payment options: For term insurance policies that come with maturity benefits, you can select your preferred method of premium payment. Premium payments can be made on a regular, lump sum, or limited basis. With the help of a term insurance premium calculator, you can also learn the estimated premium payable. 

Policy maturity: Depending on the policy tenure, term insurance with maturity benefits can occur between the ages of 18 and 65.

Premium payment mode: TROP policy premiums can be paid annually, semi-annually, quarterly, or monthly.

Coverage: A term insurance policy with a maturity benefit provides a death benefit if the insured unfortunately passes away during the policy period and a maturity benefit if they survive the entire term.

Policy Term: In TROP, the policy term ranges between 5-35 years.

Advantages of Buying Term Insurance With Maturity Benefits

Term insurance with maturity benefits offers a number of advantages. They are as follows:

Assured protection to the insured and the family: It is one of the best term life insurance plans in India, and it is a guaranteed protection plan. If the policyholder dies within the policy period, the nominee receives a death benefit; but, if s/he survives, the money put into as premiums is not lost. When the insurance policy matures, the policyholder receives a consolidated amount as the total premium amount and bonus that is paid to the policyholder.

Financial security: Term insurance with maturity benefits provides financial security to both the policyholder and their family. In case of an unanticipated event, the policyholder’s family receives a death benefit, which helps them overcome financial difficulties and move forward smoothly. If the policyholder survives, the lumpsum maturity benefits enable them to have large savings that can be used to fund important goals of the family. Although the premium payable for TROP is higher if compared with the term plan one can know using the a. 

Tax benefit: The death benefit is tax-free under Section 10(10D) of the Income Tax Act of 1961, but the premium payment is exempt under Section 80C.

Who Should Buy? Term Plans With Maturity Benefits?

Term plans with maturity benefits not only provide a lump sum payout in case of the policyholder’s death but also a refund of all premiums paid upon maturity of the policy if they survive the tenure. It can be especially useful for:

The recently married: A TROP policy, in addition to providing extensive life coverage, can be quite beneficial in dealing with additional responsibilities by paying out a big sum of money at maturity.

Young Parents: The return of premiums or death benefits can provide significant financial help for the child’s future.

The self-employed: With no guarantee of monthly income, the lump sum payout at maturity of a TROP policy can serve as a substantial savings fund. The death benefit, on the other hand, can cover the insured’s family’s expenses if he or she dies unexpectedly.

The Housewife: The death and maturity benefits can assist them protect their family’s future at low premiums.

How to Get Maturity?

The method of getting the maturity amount is simple and effortless:

• You must first obtain the Policy Release Form. A Policy Release Form is typically sent to you by your insurer about a month before your policy expires.
• After you have completed the form, you will need two witnesses to sign it.
• Then, a few days before the maturity date, submit the completed form and necessary proof to the insurer. It is crucial because if you do not complete the documentation on time, you may be unable to get your maturity benefits.
• Finally, pay attention to the maturity amount. After your policy matures, the insurance company will verify the details and deposit it into your bank account. However, the process may vary depending on the insurance company.

So we’re saying:

Despite the lack of maturity benefits, term insurance policies are extremely beneficial because they provide an assured and substantial death benefit at an affordable premium which you can calculate using the term insurance premium calculator. While it is a low-cost investment, it provides reliable financial support for your family throughout your absence. As a result, purchasing a term insurance plan is always a good investment.