What Is Maturity Amount In Life Insurance?
The amount provided by the insurer at the end of the policy term, or when your insurance plan matures, is called the maturity amount. To claim the life insurance maturity amount, you must complete the policy tenure, pay your premiums timely, and keep the policy active during its complete tenure.
Maturity amounts come in different forms with different kinds of life insurance policies. For example, a term plan with a return of premium option pays back your paid premiums once you complete the entire policy tenure. An investment plan pays your investment returns as a maturity benefit, and a guaranteed return plan pays the guaranteed sum along with the interest at the time of maturity.
Let us understand the maturity amount in detail with this article.
Types of Maturity Benefit
A plan that pays you when you survive the policy tenure sounds like a nice deal. However, the maturity amount may vary by type of plan. Therefore, the three types of maturity benefits are as follows:
- Guaranteed Plans
- Participating Plans
- Non-Guaranteed Plans
| Guaranteed Plans | Participating Plans | Non-Guaranteed Plans |
|---|---|---|
| As the name suggests, a guaranteed plan works like a saving and protection tool that offers a guaranteed return on your investment. | Participating plans offer a combination of both a guaranteed return on your investment and an accumulated cash bonus annually. | To put it simply, a non-guaranteed plan does not offer any maturity benefit once you outlive the policy tenure. Still, you will receive an annual cash bonus and a fair share of the profits earned by the participating life fund. |
| Under this plan, you will get 6% guaranteed tax-free maturity benefits once you outlive the policy tenure. | Under this plan, you will get 4% guaranteed tax-free maturity benefits and a fluctuating 4% to 8% annual cash bonus. | Under this plan, you will get an 8% non-guaranteed annual cash bonus. |
How Is the Maturity Amount Calculated?
Estimating the exact maturity amount of life insurance is not possible. But you can estimate a close value to get an idea of the maturity benefit.
Maturity benefit is calculated as the [Maturity Amount = Life Cover Assured + Cash Bonus], which has been accumulated during the policy tenure + any other additional bonus if declared. Please note that if the policyholder does not outlive the policy term, their nominee will get the life cover amount as the Death Benefit.
Difference Between Sum Assured And Maturity Benefit
| Parameters | Sum Assured | Maturity Benefit |
|---|---|---|
| Type of benefit | A sum assured is a guaranteed amount that is payable to the nominee in the event of the policyholder’s unfortunate death. | The maturity benefit is typically not guaranteed, but a portion of it can be, such as in savings plans. Under this plan, the life cover on maturity is decided during the policy inception. |
| Objective | The sum assured is beneficial to secure your family’s financial future in your absence. | The maturity benefits work as a saving and protection tool that helps you accomplish your future financial goals. |
| Nominee | The death benefit amount is payable to the appointed nominee. | The maturity claim will be directly credited to the policyholder’s account upon completion of the policy tenure. |
| Time of Claim | The death benefit is paid to your nominee in the event of your untimely death during policy tenure. | The maturity benefit is only payable once you outlive the policy term. |
| Applicability | Sum assured is given under all life insurance products. | It only applies to endowment plans, term insurance with return of premium plans, and ULIPs. |
Claim Process for Life Insurance Maturity Benefit
Most insurers offer a simple and easy-to-follow maturity claim process, and it can be accessed online or offline.
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Complete the Policy Tenure
After outliving the policy tenure, you have to file a claim to get the maturity benefit.
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File Claim with Documents
You have to file a claim along with the required necessary documents.
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Insurer Will Verify the Documents
After the verification of the documents, the insurer will process the claim and make the payment.
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Maturity Amount Will Be Paid
The maturity claim will be directly credited to the policyholder’s account.
Documents Required for Life Insurance Maturity Benefit Claim Settlement
Here, we have listed the important documents required for a hassle-free maturity benefit claim process.
- Life Insurance Policy Document
- Proof of Identity
- Proof of Residence
- Bank Documents
Conclusion
While buying a life insurance policy, it is important to understand the maturity benefit advantages carefully. Maturity benefits can provide substantial financial assistance and come in useful to achieve future goals in the later stage of your life. For further assistance, you can directly reach out to our customer care representative and get instant assistance.
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