Term Insurance is a type of life insurance policy that provides monetary assistance to the policyholder's family if the policyholder dies during the policy period. It covers the risk of premature death and ensures that the family's financial needs are met without the breadwinner. Remember, traditional term insurance plans do not offer maturity benefits. There are only a few term insurance policies with maturity benefits, including Return of Premium (ROP) Term Insurance. Read on to learn what is maturity amount, and the respective key concepts in depth.
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The maturity value in term insurance refers to the amount payable to the policyholder if they survive the term. In other words, if the policyholder outlives the policy term, the insurance company will pay out an amount.
This maturity value is also known as the survival or maturity benefits.
This amount often differs from the sum assured, which is paid to beneficiaries if the policyholder passes away during the policy term.
For those who want a policy that offers a maturity claim, it is prudent to seek plans containing this element.
It is important to note that not all TI policies offer a maturity value option. Therefore, it is essential to carefully read the policy documents and understand the terms and conditions of the policy before choosing a TI plan.
| Death Benefit | Maturity Value |
| The Death Benefit is the amount payable to the beneficiaries or nominees in case of the policyholder's death within the policy's term. | The maturity value is payable only if the policyholder survives the policy term. |
| The death benefit provides financial security to the policyholder's family in case of an unfortunate event. | The maturity value provides a lump sum amount to the policyholder as a reward for surviving the Policy Term in Insurance. |
The primary purpose of TI policies is to provide financial security to the policyholder's loved ones in the event of the policyholder’s unexpected death. TI policies are often purchased to cover specific financial obligations.
There are two types of maturity value options in TI policies.
With this option, the policyholder is not entitled to receive any maturity value if they survive the policy term. In this case, the policy only provides a death benefit to the policyholder's beneficiaries.
With this option, the policyholder can receive the maturity value if they survive the policy term. The maturity value is paid out at the end of the policy term, provided the policy is still in force.
The maturity value is paid to the policyholder if they survive the policy term, which is the duration for which the policy is in force. In most cases, the policy term ranges from 5 to 40 years, depending on the policyholder's requirements.
It is important to note that if the policyholder dies during the policy term, the death benefit will be paid to the policyholder's beneficiaries, and the maturity value will not be paid.
The maturity value in term insurance policies is calculated based on the premium paid by the policyholder, the policy term, and the age of the policyholder.
It is usually equal to the total amount of premiums paid by the policyholder during the policy term. In some cases, the insurance company may offer an additional bonus or interest on the maturity value, which can increase the total amount paid out to the policyholder.
The bonus or interest rate offered on the maturity value varies from one insurance company to another and depends on various factors such as the performance of the company and prevailing market conditions.
Return on Premium plans work like regular TI plans, except they come with a higher premium. In ROP plans, the policyholder pays premiums throughout the policy term, just like regular TI plans.
However, if the policyholder outlives the policy term, the insurance company refunds all the premiums paid by the policyholder over the policy term. Thus, ROP plans have a maturity benefit equal to the total premium paid over the policy term.
ROP plans offer several benefits to the policyholder, such as the following:
However, ROP plans also have a few disadvantages, such as the following.
When choosing a term insurance plan with maturity benefits, consider the following factors:
Evaluate what money you will need in the future, such as saving for retirement, paying for your children's schooling, or covering high costs that might arise. This will help you decide on a suitable maturity amount when the policy term ends.
It's important to choose an insurance premium that fits comfortably within your budget. Opting for a higher maturity amount may lead to higher premium payments, which could create financial strain. Finding a balance that ensures both adequate coverage and manageable payments is key to peace of mind.
For longer policy terms, it is rational to select higher maturity benefits to help balance cost and future expenditure. Reconsider the maturity sum assured, as it is important to recognise the long-term value it offers.
The primary focus of term insurance should be on providing life protection. When deciding on premium payments during the policy term, it's important to strike a balance between the sum assured and the maturity amount that may be paid out at the end of the term.
Learn how the maturity amount will be taxed and what can be deducted from the maturity amount or applied as an exemption. Analyse how maturity claims impact your taxes, especially in policies that may offer tax advantages.
Every family needs financial protection against life situations. Term insurance is an essential financial security tool to protect your family from these unexpected events and ensures you are secure today and tomorrow. Most long-term insurance policies emphasise providing death benefits to the beneficiaries. Still, some plans, including the return insurance of insurance policies (ROP), are based upon the current period until maturity.
These ROP plans are a mix of life insurance that saves money by returning premiums paid during the policy. The term insurance calculator is an essential tool that offers diverse options, lets you choose the best life insurance plan in India, and provides a helping hand toward your financial goals and budget.
The availability of life insurance plans in India is widespread; however, finding plans like the best term insurance plan for 1 crore requires proper research and consideration of factors like risk coverage, policy tenure, premium, and more. Ensure the premium is not heavy on your pocket while also ticking off all the expectations from your chosen term plan.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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