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Term life InsuranceAugust 5, 2020

Should I invest in term plan with maturity benefit?

Term Insurance policies are pure protection plans that are specifically designed to secure your family financially in your absence. It is a must for a sole earner of the family who has various liabilities and responsibilities.

Should I invest in term plan with maturity benefit

Term plans are known for offering death benefit in case the insured’s death within the policy duration. However, there are chances that the policyholder survives the term of the policy, so in that case, the insurance company does not pay back anything to the insured. In such a scenario, what about the financial goals that you might have planned?

In case you want to get back what all you have invested, then you should consider term plan with maturity benefit. Now, let us understand the concept of term plan with maturity benefit and its features.

Term plan with maturity benefit is a variant of the regular term insurance policy and possess slight difference ensuring maturity benefit. The traditional term insurance policy only offers death benefit upon the demise of the policyholder within the tenure of the policy. It does not provide any survival or maturity benefit if the insured survives until the end of the policy term. But if the insured person wants to avail maturity benefit option with a term plan, then he or she can opt for a term plan with return of premium (TROP) policy. Under TROP plans, all the premiums are returned to the policyholder on the maturity of the policy. 

Features of Term Plan with maturity Benefit

However, in order to make a wise decision, it is essential for you to know the benefits of a term plan with maturity benefits.

 

Entry Age

18 years to 65 years

Maturity Age

Varies from policy to policy – could be 25 years to 75 years

Freelook period

15 days if policy purchase manually and 30 days in case purchased online

Different ways to pay premiums

Single payment, Limited pay and Regular payment options

Policy revival

The revival of insurance policy is possible within two years from the date of unpaid premium.

Frequency to pay premium

Yearly or monthly

Policy benefit

Both maturity and death benefit

Policy term

5 years 35 years

Advantages of Term plan with maturity benefit

Term insurance with return of premiums can be referred as a term plan with maturity benefit. These plans are quite different from the regular term policies. Here are its benefits in detail which will help you in understanding its importance in a better way.

  • Death Benefit and maturity benefit: As the name suggests, the term plan with maturity benefit offers maturity benefit as well as a death benefit. In the case of policyholder’s demise within the tenure of the policy, then the policy beneficiary receives the sum assured or death benefit. Whereas if the insured person survives the whole term of the policy that is till its maturity, then he or she gets back all the premium paid towards the policy. Generally, traditional life insurance plans do not provide any maturity benefit in case of the survival of the policyholder.
  • Tax Benefits: The premiums paid towards the term plan with maturity benefit are eligible for tax benefits under section 80 C of the Income Tax Act. The maturity benefit amount that is received by the policyholder upon the maturity of the insurance policy is also exempted from the income tax evaluation under section 10 (10D) of the Indian Income Tax Act, 1961.
  • Riders: Different riders like Accidental Death or Disability rider, Critical Illness rider amongst others can be added to the term plan with maturity benefit. The riders further enhance the spread of insurance coverage.

Term plan with maturity benefit is ideal for those who think investing in term life insurance is a waste of money as it does not provide any maturity benefit. But one has to remember that the premiums for this variant of term insurance are expensive than the regular term plans. It entirely depends on the policy applicant’s preferences on which insurance policy to choose. However, it is always advised to thoroughly compare the insurance policies and then opt for the right term life insurance policy. If you are looking for a term plan with maturity benefit, then you can visit BimaKaro.in, compare different policies and then choose the right one for yourself. You can also speak to our insurance experts who can guide you to make the correct decision.

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