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Features
Ref. No. KLI/22-23/E-BB/492
Term insurance maturity benefits offer policyholders a refund of premiums paid if they outlive the policy term, providing a unique blend of financial protection and savings accumulation.
Term insurance is a popular choice for individuals seeking financial protection for their loved ones in the event of their demise. Traditionally, term insurance plans offer pure protection without any savings or investment component.
However, in recent years, insurance providers have introduced innovative variants of term insurance that include term insurance maturity benefits, adding an extra layer of financial security for policyholders.
Term insurance is a type of life insurance that provides coverage for a specified period, known as the term of the policy. Unlike other forms of life insurance, such as whole life or endowment plans, term insurance offers pure protection without any savings or investment component. In the event of the policyholder’s demise during the term of the policy, the insurer pays a death benefit to the nominee(s) designated by the policyholder.
Term insurance maturity benefits, is a type of term insurance plan that provides a refund of premiums paid by the policyholder if he or she survives the term of the policy. Unlike traditional term insurance plans, where the premiums paid are purely for the death benefit, ROP term insurance offers the dual benefit of financial protection during the policy term and a refund of premiums at maturity if the policyholder outlives the policy term.
Understanding the key features of these plans is essential for individuals seeking comprehensive coverage for their loved ones’ financial security. Let’s delve into the distinctive characteristics of term insurance plans with maturity benefits:
Term insurance plans with maturity benefits typically have a specified entry age criterion, determining the age range within which individuals can apply for the policy. The entry age varies among insurance providers and plans, with some offering coverage to individuals as young as 18 years old and others extending coverage up to 65 years or beyond.
These plans offer flexibility in premium payment options, allowing policyholders to choose from various payment frequencies such as annual, semi-annual, quarterly, or monthly premiums. Policyholders can select the premium paying option that best aligns with their financial capabilities and preferences, ensuring ease of payment and continuity of coverage.
One of the defining features of term insurance plans with maturity benefits is the inclusion of a maturity benefit component. At the end of the policy term, if the policyholder survives, the insurer returns all premiums paid over the term of the policy. This maturity benefit provides a financial cushion and serves as a reward for maintaining the policy throughout its duration.
Policyholders have the flexibility to choose the mode of premium payment that suits their convenience and lifestyle. Whether it’s through online channels, auto-debit facilities, or traditional payment methods, term insurance maturity benefits offer a range of payment modes to ensure hassle-free premium payments.
Term insurance plans with maturity benefits provide comprehensive coverage against the risk of premature death during the policy term. In the event of the policyholder’s demise, the insurer pays a death benefit to the nominee(s) designated by the policyholder. This death benefit helps cover financial obligations such as outstanding debts, mortgage payments, children’s education, and daily living expenses.
The policy term of term insurance maturity benefits can vary based on the insurer and the specific plan chosen. Policyholders have the flexibility to select the duration of coverage according to their needs and financial objectives, with policy terms typically ranging from 10 to 40 years.
This innovative variant of term insurance comes with several advantages that make it a compelling choice for individuals seeking comprehensive coverage and financial security. Let’s explore the key advantages of term insurance maturity benefits:
Term insurance with maturity benefits ensures assured protection for policyholders and their families against the risk of premature death. In the unfortunate event of the policyholder’s demise during the term of the policy, the insurer pays a death benefit to the nominee(s) designated by the policyholder. This death benefit provides a financial cushion to cover outstanding debts, mortgage payments, children’s education, and daily living expenses, ensuring that the policyholder’s loved ones are taken care of financially.
One of the significant advantages of term insurance maturity benefits is the added layer of financial security it offers. In addition to providing protection against the risk of premature death, these plans provide policyholders with the assurance of receiving a maturity benefit if they survive the term of the policy. The maturity benefit, which consists of a refund of all premiums paid over the policy term, serves as a financial reward for maintaining the policy throughout its duration.
Term insurance with maturity benefits offers tax benefits to policyholders, making it a tax-efficient investment option. Premiums paid towards term insurance plans are eligible for tax deduction under Section 80C of the Income Tax Act, subject to certain limits. Moreover, the maturity proceeds received by the policyholder at the end of the policy term are tax-free under Section 10(10D) of the Income Tax Act, provided certain conditions are met. By leveraging these tax benefits, policyholders can optimize their tax liabilities and enhance their savings and investment returns.
By understanding your family’s needs, evaluating your financial obligations, and comparing different term plans, you can make an informed decision that aligns with your long-term goals. Key steps to choosing the best term insurance maturity benefits are:
Start by assessing your family’s life stage requirements and financial goals. Consider factors such as the number of dependents, their age, education needs, and future aspirations. Determine the coverage amount and policy term that would provide adequate financial protection for your family’s evolving needs and lifestyle.
Evaluate your existing loans, liabilities, and financial obligations, such as home loans, car loans, personal loans, and credit card debt. Choose a term insurance plan with maturity benefits that offers sufficient coverage to pay off these debts in the event of your demise, ensuring that your loved ones are not burdened financially.
Calculate the premiums payable for different term insurance plans with maturity benefits based on your age, coverage amount, policy term, and health status. Ensure that the premiums are affordable and fit within your budgetary constraints while providing adequate coverage and benefits for your family’s future financial security.
Evaluate the premium paying options offered by different term insurance plans, including annual, semi-annual, quarterly, or monthly premium payment frequencies. Choose the premium paying option that aligns with your cash flow and financial preferences, ensuring ease of payment and continuity of coverage.
Compare term insurance plans with maturity benefits offered by various insurance providers in terms of coverage, premiums, policy terms, maturity benefits, riders, and claim settlement ratio. Consider factors such as the insurer’s reputation, financial strength, customer service, and online facilities to make an informed decision.
Opt for a term insurance plan with maturity benefits offered by an insurer with a high claim settlement ratio and a reputation for prompt and hassle-free claim settlement. Review customer reviews, testimonials, and feedback to gauge the insurer’s track record in settling claims efficiently and fairly.
Term life insurance with maturity benefits presents a unique opportunity for individuals to safeguard their loved one’s financial future while also securing their own. Let us see who can benefit the most from purchasing term life insurance with maturity benefits:
Young parents, especially those with dependent children, are prime candidates for term life insurance with maturity benefits. These individuals are often in the early stages of their careers and may have significant financial responsibilities, including mortgage payments, childcare expenses, and education costs. By opting for term life insurance with maturity benefits, young parents can ensure that their children are financially protected in the event of their untimely demise while also having the peace of mind of receiving a lump sum amount at the end of the policy term.
Self-employed individuals, such as freelancers, entrepreneurs, and small business owners, often have irregular income streams and may not have access to employer-sponsored life insurance coverage. Term life insurance with maturity benefits can be an ideal solution for self-employed persons seeking comprehensive financial protection and savings accumulation. By investing in such a policy, self-employed individuals can ensure that their families are financially secure in their absence and have a financial cushion to fall back on in the long run.
Homemakers play a vital role in managing household responsibilities and caring for their families. Term life insurance with maturity benefits offers homemakers the opportunity to protect their families’ financial future and secure their own financial well-being. By purchasing such a policy, homemakers can ensure that their families are financially protected in the event of their demise while also having the assurance of receiving a refund of premiums if they outlive the policy term.
Despite the absence of a maturity benefit component, there are several compelling reasons to consider purchasing a term insurance plan. The main reasons why individuals should buy term insurance even if there are no maturity benefits are:
The primary purpose of term insurance is to provide financial protection for one’s dependents in the event of the policyholder’s untimely demise. By purchasing a term insurance plan, individuals ensure that their loved ones are financially secure and can maintain their standard of living even in their absence. The death benefit provided by term insurance helps cover expenses such as outstanding debts, mortgage payments, children’s education, and daily living expenses, relieving financial burdens on the family during difficult times.
Term insurance plans are known for their affordability and accessibility, making them accessible to individuals across different income levels. Compared to other types of life insurance, such as whole life or endowment plans, term insurance typically offers lower premiums, allowing individuals to obtain substantial coverage at a relatively low cost. This affordability makes term insurance an attractive option for individuals looking to secure financial protection for their loved ones without straining their finances.
Term insurance plans offer flexibility and customization options, allowing individuals to tailor their coverage to suit their specific needs and financial goals. Policyholders can choose the coverage amount, policy term, and premium payment frequency based on their individual circumstances and requirements. Additionally, term insurance plans often offer riders or add-on benefits that can enhance coverage, such as accidental death benefits, critical illness benefits, and waiver of premium riders, providing additional peace of mind to policyholders and their families.
By purchasing term insurance, individuals effectively manage the risk of financial loss in the event of their premature death. Term insurance provides a safety net for policyholders and their families, offering peace of mind knowing that their loved ones will be taken care of financially in case of an unfortunate event. This sense of security allows individuals to focus on their personal and professional pursuits with confidence, knowing that their family’s financial future is protected.
Term insurance plans offer tax benefits under the Income Tax Act, making them a tax-efficient investment option. Moreover, the death benefit received by the nominee(s) in the event of the policyholder’s demise is tax-free under Section 10(10D) of the Income Tax Act, ensuring that taxes do not erode the financial proceeds.
Term insurance maturity benefits offer a valuable combination of financial protection and savings accumulation, providing policyholders with peace of mind and security. By understanding the features and benefits of term insurance with maturity benefits, individuals can make informed decisions about their life insurance needs and ensure comprehensive coverage for their families’ financial well-being.
1
No, traditional term insurance plans do not offer maturity benefits. They provide pure protection against the risk of premature death, with no savings or investment component.
2
When a term insurance policy matures, there is no payout to the policyholder because traditional term insurance plans do not offer maturity benefits. The coverage ends, and the policyholder does not receive any financial proceeds.
3
No, there is no way to get money back in term insurance after maturity because traditional term insurance plans do not offer maturity benefits. Once the policy matures, there is no payout to the policyholder.
4
The main difference between a pure term insurance plan and a term plan with maturity benefits is that pure term insurance plans only provide death benefit coverage, whereas term plans with maturity benefits offer a refund of premiums if the policyholder outlives the policy term.
5
The term insurance maturity benefits are usually not taxable because they consist of a refund of premiums paid by the policyholder over the policy term. However, it is advisable to consult with a tax advisor or financial expert to understand the tax implications based on individual circumstances and local tax laws.
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Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
