Term Insurance with Maturity Benefit: Is it Wise to Purchase?

A wise man will always agree with the fact that it's never too late to secure your financial future, but the sooner you start, the better off you and your loved ones will be in the future. There are many insurance policies available in the market. Amongst all of these, term insurance with maturity benefit is the most popular among customers. Let's get to know in detail about the policy.

When you receive an amount after the maturity of an insurance cover, it is known as maturity benefit. It mainly includes three components - Sum Assured, Accrued Bonus, and Terminal Bonus, if any. The maturity benefit is only applicable when the policy is active. Also Read: What is Term Insurance?

Regular term insurance has no maturity benefit as it only provides a lump sum amount in case of policyholder's death. On the other hand, a term insurance policy with maturity benefit or TROP offers a refund of premiums at the time of maturity. You can avail of the benefit only when you survive through the policy term.

• Any person between the age of 18 and 65 years is eligible to purchase the policy
• You can make either single or regular premium
• The maturity differs from policy to policy
• Term insurance offers both death and maturity benefit
• The minimum policy term is five years, and the maximum can range from 30 to 35 years
• You can choose a nominee if you opt for term insurance with a maturity benefit policy
• The premium rate is based on the age and sum assured of the applicant
• The free-look period is 15 days if you purchase the policy offline and 30 days if you buy the policy online.

• Maturity benefit One of the biggest advantages of this type of policy is maturity benefit. Once the policy matures and the policyholder survives through the term, the insurer refunds the total premium amount.
• Death benefit Like traditional term insurance policy, the term insurance with maturity benefit also offers a death benefit. If the insured person dies in any event, the nominee gets the sum assured along with an accrued bonus, if any.
• Tax benefit A policyholder can enjoy tax benefits on premiums paid under Section 80C of the IT act.
• Miscellaneous The term insurance with maturity benefit policy lets you enhance the coverage with riders/add-ons. You can opt for Critical Illness and Accidental Death or Disability riders.

Before choosing the best policy, you need to consider the following factors:

• Dependent family members at different life stages
• Decide the insurance cover amount based on your family needs
• Include liabilities (personal loan, car loan or term loans) in the life cover
• High claim settlement ratio

Whether you choose a traditional term insurance cover or the variant with maturity benefit, you must have an insurance cover that protects your family in your absence. You should evaluate the life cover amount, policy period, insurer reputation, and policy type before making an informed decision.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.