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Term Plan with Maturity Benefit

By Finserv MARKETS - Apr 25,2020
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Does Term Insurance Have a Maturity Benefit?

A term insurance plan is a protection plan that financially secures your loved ones in your absence. But with the multiple insurance providers available in the market, choosing the right term insurance from one of them becomes overwhelming.

Ideally, a term plan should financially secure your family in case of your sudden dismissal. So, it is crucial to look for a policy that offers reasonable maturity benefits at the end of the policy tenure.

In this article, we will be discussing how to receive maturity benefits in term insurance

Maturity Benefits of Term Insurance

The maturity benefit is the amount received by you (the policyholder) received when the policy matures. Usually, term insurance plans do not offer maturity benefits. It only offers death benefits to the beneficiaries of the policy. So, if you want to avail the maturity benefits in your term plans, you will have to opt for the ‘Return of Premium’ term plan.

With the return of premium term plan, you will receive the premiums paid after the policy matures along with the benefits of a term insurance plan as agreed upon by the insurer. Basically, the return of premium plan allows you to secure the maturity benefits in case you were to outlive the policy tenure.

Key Features of Term Insurance Plan

To receive maturity benefits, it is necessary to buy the ‘return of premium’ add-on cover with the basic term insurance plans. Apart from this, the other key features of term insurance plans include –

Features Details
The Free look period The free look period is the duration within which the policy can be terminated if you think you made a mistake by buying it. Generally, this period is –

●     15 days for a manually purchased policy

●     30 days for policies purchased online

Note: It can vary across insurance providers.

Entry Age Term insurance can be purchase by someone who is within the age bracket of-

●     Minimum entry age:18 years

●     Maximum entry age: 65 years

Grace period The grace period is the duration within which the premiums can be paid without lapsing. Depending on your insurer, the grace period can be –

●     15 to 30 days based upon policy modes. It is 15 days for monthly mode policies and 30 days for other modes

Plan type With term insurance, you have the flexibility to add your spouse in your plan.
Premium paying term You can pay premiums as –

●     Single pay

●     Limited pay

●     Regular pay

Age at maturity The maturity age for term insurance can be anywhere between 25 years/ 65 years/ 75 years to whole life. However, it depends on your insurer.
Policy revival You can revive the policy within two years from the date of the unpaid premium.
Premiums Term insurance premiums are based on the sum assured amount you choose and your age (applicant’s age).
Nomination Term life insurance policies with maturity benefits allow you to provide beneficiaries.
Premium paying frequency Premiums could be paid on a Yearly or monthly basis, as per your convenience.
Sum Assured The sum assured amount varies depending on your insurer.
Policy coverage Term insurance plans offer death benefits and maturity benefits. However maturity benefits are provided only if you have taken the ‘return of premium’ add-on cover.
Policy term You can choose the policy tenure between –

●     Minimum- 5 years

●     Maximum – 30-35 years

Types of Benefits Covered Under Maturity

Here are a few benefits of term insurance plans that offer maturity benefits –

  1. Death Benefits – Just any basic term insurance plans, term insurance with maturity benefits offer death benefits as well. In case of sudden unfortunate death, the insurer will compensate the beneficiaries of the policy with the predetermined amount.
  2. Maturity Benefits – Traditional term insurance plans do not offer maturity benefits. But with the return of premium add-on cover, you will receive the premiums paid if you outlive the policy tenure.
  3. Tax Benefits – Term plans with maturity benefits allow you to claim tax deductions on the premiums paid under Section 80C of the Income Tax Act. Moreover, the maturity benefits (if available) are tax-free under Section 10(10D).
  4. You can also avail add-on covers such as critical illness cover, accidental death cover, or permanent disability cover.
  5. Term insurance with maturity benefits has affordable premiums.Determining the tenure of your term plan is as essential as calculating the premiums you pay. You can check our term insurance calculator to compute your premium amount. It is ideal to choose a longer tenure when it comes to keeping up with the financial needs of the future and stay covered in times when your loved ones need financial security

Should I Purchase Term Plan With Maturity Benefit?

No clock in the world tells us how long we have until it’s our time-up. A term insurance plan with maturity benefits ensures that if you outlive the policy, the amount invested is credited back into your account. That way, even though you don’t receive any death benefits, there is no loss incurred over time.

How To Choose The Best Term Insurance Plan With Maturity Benefit?

Choosing the best term insurance plan with maturity benefit can be an overwhelming decision, especially when there are several term plan options available in the market. In that case, it is wise to compare different term insurance plans from several insurers based on the premiums charged, coverage, exclusions, policy term, and more. Based on the evaluation, you will be able to determine which term insurance plan is affordable and fulfils your needs.

To Conclude

To ensure that you invest in the best term insurance plan that suits your needs, consider buying the policy with maturity benefits. This way, if you happen to survive the policy term, the premiums paid are refunded and won’t be a total loss for you.

FAQs

Q: Does a basic term plan offer maturity benefits?

A: No. If you want to avail the maturity benefit on your term insurance plan, you need to opt for the return of premium cover. It is a rider benefit available in the market that allows you to reap maturity benefits on your term plan.

Q: What happens when the term insurance plan matures?

A: In ideal cases, if your term plan matures, the policy is terminated, and no benefits are paid. However, with the return of premium cover on your term insurance plan, the insurer is liable to repay you the primary premiums paid towards the policy, which act as maturity benefits.

Q: What is the maximum maturity age in term insurance in India?

A: The maximum maturity age in term insurance is 65 years in India.

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