Basic guide to understand Term Insurance maturity benefits

This is basically termed as “sum assured”, or the fixed amount that the family is assured in case the policyholder passes away. 

However, since term insurance benefits become due once the policyholder dies during the specific term; there may be situations too where nothing unfavourable happens during such a term. Then what? You have kept aside a fixed sum of money every year towards these premiums for your family’s protection which you could have used for your child’s education or house, or any other financial goal. Does it mean there is no payback? 

It may seem weird paying premiums for term insurance that does not offer you any return at the end; but if you look at the benefits from a holistic perspective, you’ll see that term insurance provide you with a considerably higher sum assured benefit that most of the plans don’t. Further, the addition of more riders to the plan further widens your coverage under the term insurance policy. Under basic term life insurance coverage, there is NO payback if such a situation arises. But if you are looking to gain some benefits from this plan in such an eventuality, then opt for term insurance with maturity benefits.

Types of term insurance maturity plans

1. Endowment Plans

   This type of term insurance with maturity benefit is the ideal combination of insurance and investment. The funds are invested usually in debt funds; so not only are returns earned but also the risk is manageable. The earnings from these funds are clubbed on to your sum assured and provided to your family.
   
   

2. Term Life with Return of Premium (TROP) Plans

   These are basic term insurance maturity plans where the sum of paid premiums is returned, along with some interest, to the surviving insured at the end of the term.
   
   

3. Unit Linked Insurance Plans (ULIPs)

   These are similar to endowment plans, but the funds are invested into the market; thereby, making it ideal for a risk-taking individual. Considering the risk is higher, returns are also higher under ULIPs. You can also partially withdraw funds from these term insurance plans.   

Advantages of term insurance with maturity benefits

1. Death Benefit

   Similar to every term insurance plan, these plans provide you with a death benefit. i.e. the return of the sum assured to the nominees once the insurance holder dies during the term of the plan.

2. Maturity Benefit

   Most of the term insurance maturity conclude when the insurance holder dies during the term, or they reach the end of their term. At maturity, term life insurance plans do not provide any payout. But maturity benefit is provided under TROP plans even if the insured survives the term maturity.

3. Pricing

   Term insurance plans are relatively more affordable as compared to other life insurance plans.

4. Tax Benefits

   Your term insurance benefits include tax benefits which can be claimed under Section 80 C and 10(10D) of the Indian Income Tax Act, 1961.

5. Riders

   You can further add on to your term insurance benefits and coverage by adding on further riders such as Accidental Death or Disability or Critical Illness riders.      

Several insurance companies have introduced numerous term insurance with maturity benefit plans, with each having its own advantages. In order to choose the best maturity benefit plan, you need to shop around and select the one that best suits your requirements. You can compare the applicable premium amounts through the online premium calculator, the claim settlement ratios and the time taken for settlement. You can also opt for a single/ joint term insurance policy and decide on the term insurance benefits that best suits you. Browse the website to know more about Term Insurance and the various Term Plans offered by PNB MetLife.