What You Need to Know About Maturity Benefits While Buying Life Insurance?
It is an absolute necessity to buy a life insurance if one is to protect their family in case of death, accidents or disabilities which might cause loss of income. The loss of a loved one can never be fulfilled but the monetary value of a life insurance is basically the compensatory amount that is determined on the basis of loss of future income.
The term “sum assured” is actually the guaranteed amount that a family receives if the breadwinner of the family passes away or is disabled.
However, what happens when the policy holder survives the term period and nothing happens to him? Under usual term insurance policies, there are no paybacks and all the premium money paid are considered gone.
Hence, when it comes to attaining other life goals like paying for children’s higher education or for their marriage, then the money could have really come in useful.
Hence, it is best to opt for term life insurance plans where there are maturity benefits and for this one needs to ask the insurance company about the options they have. Here are some of the options that you have:
- Term Life with Return of Premium or TROP plans: With these plans, which are also term plans, one gets the advantage of the premium amount coming back to the holder of the policy in case he or she survives the policy term. Hence, even if nothing extra is gained, at least all the money that went towards the premiums are acquired back.
- Endowment Plans: These are investment cum insurance plans where investments are usually deployed into debt based instruments. The returns may not always be on the higher side but risks are comparatively more manageable as well.
- Unit Linked Insurance Plans or ULIPs: These two provide the investor with the benefit of both investment and insurance but since this is a market linked product, the potential for risk is higher than traditional life insurance, which means, if the market goes down, so does the returns and someone with a good knowhow of market trends must opt for this. There are also some associated charges to be incurred. On the other hand, since these plans provide the policy holders equity exposure, it enables them to grow their wealth at a much higher rate of return. These plans would also allow partial withdrawals.
Post maturation of the policy, the holder may be eligible to claim the benefits and the fixed payment is made by the insurance firm accordingly if it is a conventional policy.
Additionally, if it covers market linked financial products then the amount is variable. The benefits upon maturity also encompass the premiums that have been paid till a specific date in addition to other benefits which may find mention in the terms and conditions document of the policy.
The amount increases steadily each year and hence there are double benefits of investment plus insurance. Entry ages for these types of plans is 18 years in most cases and this may increase up to 65 years.
The nominee of the policy holder will get the sum assured in case of death of the latter.
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Category: Insurance
