Insurance
•01 min read
Welcome to our brand-new series, A-Zs of Insurance. In this series, we will venture into the world of insurance to breakdown insurance jargon for you, so you’re empowered to make informed decisions about your financial security.
Everybody has dreams and hopes. Perhaps you dream of sending your child to a prestigious university abroad or building your dream home or saving up for an exciting retirement, or even starting your own business.
A good way to achieve your goals and secure your financial well-being at the same time is through insurance-cum-investment instruments that offer both life insurance coverage and a maturity benefit.
This maturity benefit can be a valuable part of your financial strategy, no matter what your needs are. Let’s understand what ‘maturity benefit’ means.
Well, no. Whether or not you’ll get a maturity benefit depends on the type of life insurance plan you’ve bought and its specific features.
In general, life insurance plans are of two types: pure protection plans and plans with investment returns. Pure protection plans only offer insurance coverage and no maturity benefit, whereas plans with investment returns offer you both insurance coverage and a maturity benefit.
A few examples of such plans are whole life insurance plans, endowment plans, guaranteed savings plans, ULIPs, etc.
This entirely depends on whether your life insurance is market-linked or not.
If your life insurance plan is market-linked (like a ULIP), your maturity benefit will depend on the performance of the funds you’ve invested in.
If your life insurance plan is not market linked (like a guaranteed savings plan), the maturity benefit will be decided at the time of policy purchase. You’ll get a fixed amount when your plan matures.
Please go through your plan’s documents carefully to understand if and how the maturity benefit applies to it.
All life insurance plans come with a policy term, i.e. the maximum period they’ll be active for. When you buy life insurance, you have the flexibility to choose the policy term based on your and your family’s financial needs.
The last date of your plan being active is called the date of maturity. The benefits or payout you get once your plan matures is known as the ‘maturity benefit’.
So, if your life insurance plan has a policy term of 15 years, you’ll get the maturity benefit after these 15 years end.
This payout can be used to achieve your financial goals like your kid’s higher education, establishing a secure retirement, real estate investments, and more.
