A Comprehensive Guide on Term Insurance with Maturity Benefits

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.

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.

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:

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

Best Term Life Insurance Companies

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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