A Comprehensive Guide on Term Insurance with Maturity Benefits


6 min read

Delving deeper into what term insurance plan with maturity benefit is, how it helps, its disadvantages, and whom is it really for.

If you’re planning to buy term insurance to secure the future of your loved ones, it’s good to understand here that they are of two types. One is the basic and pure term insurance plan while the other is term life insurance policy with maturity benefit. We share below both the different types of term insurance plans for your better understanding.

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What is a Pure Term Insurance Plan?

As the name suggests, a pure term insurance policy is the most basic and pure form of life insurance that offers financial protection to the insured for a defined duration of time. In case of an unfortunate demise of the insured during this defined period, the insurer is liable to pay the amount of sum assured to the beneficiary or nominee selected by the insured at the time of purchase of the policy.

The nominee is generally a close family member or loved one of the insured. However, in case the insured survives through the entire policy term defined, he/she is not entitled to receive any monetary benefit from the plan.

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What is Term Insurance Plan with Maturity Benefit?

Term insurance plan with maturity benefit is again issued by the insurer for a set period of time. In case of an untimely or unfortunate death of the insured, the family (nominee) receives monetary benefit under the policy to cover financial expenses in the absence of the insured. However, in case the insured is able to survive through the policy term, he/she is entitled to receive maturity benefits (monetary) upon the maturity of the plan.

The maturity benefit is generally in the form of premium return, which has already been paid towards the policy. However, there can be several other benefits based on the type of plan chosen, for instance, a bonus. Hence, the only difference between a pure term insurance plan and a term plan with maturity benefit is the monetary benefit payable to the policyholder in case they survive the term of the policy until it matures.

Also Read: Advantages & Disadvantages Of Term Insurance Plan

Examples of Term Insurance Plans with Maturity Benefits

A term insurance plan named TROP or Term Return of Premium is one such term plan that offers a unique maturity benefit to the policyholder if they survive through the term of the policy until its maturity. Under the TROP plan, the policyholder is offered a unique feature, which is not generally found in pure term insurance plans. This is the return of premium feature under the plan.

With this unique feature, the insured is returned or handed back by the insurer all the premiums (GST excluded) that have been paid throughout the specific term of the policy in case the insured survives until the policy maturity. With this benefit, the policyholder can look forward to receiving monetary benefit for the future of his loved ones.

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Also Read: Cost of an INR 50 Lakh Term Insurance Plan in India?

Pros and Cons of Buying a Life Insurance Policy with Maturity Benefits

Like any other insurance product, a term plan with maturity benefit also comes with its own advantages and disadvantages. As a prospective buyer of the plan, it helps to understand these pros and cons before deciding to invest in it.

The table below details the various benefits and drawbacks of life insurance with maturity benefit:

Pros of Buying Term Insurance Plan with Maturity Benefits Cons of Buying Term Insurance Plan with Maturity Benefits
The sum assured, in addition to the accumulated bonus (if any), is given by the insurer to the beneficiary of the insured in case of the latter’s demise during the policy term Under the TROP term insurance plan, the entire premium amount is not refunded as it is to the policyholder if they manage to survive the term. Taxes such as GST levied on the premium paid towards the policy are not refunded. Some insurers may also not refund the premium paid on rider benefits or the additionally charged underwriting premiums.
Tax exemptions are provided to the insured on the premium payable towards the policy under Section 80C of the ITA, 1961 A term insurance with maturity amount demands a higher premium to be paid towards the policy
Upon maturity of the policy term, the total premium paid during the policy period is refunded to the insured if they were able to survive through the defined policy period There is no investment option available in term life insurance with maturity benefit. No interest is payable with the premium refunded to the insured and the amount refunded is also not in sync with inflation
Add-on rider benefits can be included under the plan by the policyholder to enhance its coverage, such as Critical Illness Cover and Disability Rider

Whom is Term Insurance Plan with Maturity Benefits for?

A term insurance offering maturity benefits to the policyholder is ideal for the following people:

  1. Those who feel that the term insurance plan would be wasted in case they survive the policy term. With the TROP plan’s return of premium benefit, more people can now be encouraged to buy term insurance with maturity.
  2. Those interested in saving for the future and receiving comprehensive insurance protection must opt for this plan.
  3. Those who can comfortably afford to pay a higher premium towards maintenance of such a policy, since the premium payable towards TROP is relatively higher than a pure term insurance plan.

Read More: Term Insurance Premium – A Key Factor To Finding The Best Coverage

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Summing Up

Term insurance is meant to guarantee financial protection to the loved ones of the insured in case of their sudden demise. However, no monetary benefit is assured if the policyholder survives the policy term. This is why some people are discouraged from buying a term plan. However, with the term insurance with maturity benefits plan, such as TROP, more people are now getting encouraged to invest in these plans due to the unique return of premium features offered therein. For some best offers on term insurance with maturity benefit policy, visit PayBima.

Also Read: Best Term Insurance Companies in India with Highest CSR

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FAQs on Term Insurance with Maturity Benefits

What is term insurance with maturity benefits?

A term insurance policy with maturity benefits is a form of life insurance policy that pays out if the policyholder outlives the policy period. Unlike standard term insurance plans, which only pay out a death benefit to beneficiaries upon the death of the policyholder, a term insurance policy with maturity benefits pays out a lump sum to the policyholder if they outlive the policy period.

How does term insurance with maturity benefits work?

Term insurance with maturity benefits functions in the same manner that standard term insurance plans do. The policyholder pays a premium to the insurance provider, and their beneficiaries get a death benefit if they die within the policy period. If the policyholder outlives the policy term, they are paid the sum guaranteed, which is the amount of coverage bought.

What are the benefits of term insurance with maturity benefits?

Term insurance with maturity benefits offers the insured both life insurance protection and savings. If the policyholder survives the policy period, they will get a lump sum payout that can be utilised for a variety of objectives, such as debt repayment or retirement funds. Furthermore, these policies are often less expensive than other forms of life insurance policies, making them a popular alternative for those on a tight budget.

Who should consider term insurance with maturity benefits?

Those who want life insurance protection but also want to save money in the long run can consider term insurance with maturity advantages. These plans are especially ideal for those who want to save for a specific financial objective, such as paying for their child's school or supporting their retirement. Furthermore, term insurance with maturity benefits is an excellent alternative for anyone seeking for a low-cost life insurance policy with flexible coverage options.

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Nov 17, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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