Choosing the right life cover is one of the most important financial decisions you make. A clear understanding of options helps you plan better. In India, one choice is a term life insurance plan that includes maturity benefits. Such a plan not only offers protection if something happens during the policy term but also gives you a benefit if you survive. Let’s explore how a term life insurance plan with maturity benefits works, its key features and who should go for it.
First, let’s clarify what term insurance is: It is a type of life insurance where you pay regular premiums during a fixed period (term). If you die during the term, your beneficiaries receive a lump sum death benefit.
A term life insurance plan with maturity benefits is a variant of this: while it provides the usual death benefit, you receive a maturity benefit if you survive the policy term. This benefit is often a refund of all premiums paid. These plans are also called ‘Return of Premium (ROP)’ term plans.
In short, you get life cover and a return of your money (in the form of maturity benefits) if you outlive the term. It bridges risk protection and savings.
Here are the main features you will find in a term life insurance with maturity benefits plan:
Death Benefit + Maturity benefit
The policy pays the sum assured to the nominee on death during the term. If you survive the term, the maturity benefit (often total premiums paid) is paid to you.
Entry Age/Eligibility
The usual entry age is between 18 to 65 (varies by insurer) years, for these plans.
Policy term/Maturity age
The term may range between 5-35 years (or more), depending on the plan. At the end of the term, you get maturity benefits if you are alive.
Premium Payment Options
You often get choices such as single pay, limited pay or regular pay modes. The premiums may be paid annually, half-yearly, quarterly or monthly.
Sufficient Coverage
While you pay higher premiums compared to a plain term life insurance plan (because of the maturity benefit), the coverage is still significant.
Tax Benefits**
Premiums paid qualify for deduction under Section 80C of the Income Tax Act, and maturity payouts (in many cases) are tax-free under Section 10(10D), if certain conditions are satisfied.
Before you choose a policy, you can make use of a term life insurance premium calculator provided by insurers to estimate how much premium you need for a given cover and term.
In choosing such a plan, you balance between a higher premium cost and the benefit of getting your premiums back plus a cover.
This kind of policy may suit certain profiles of individuals better:
Newly married couples
If you are just starting out and want both strong protection for your future family and also the comfort of getting your premiums back if nothing happens, this plan can give you that dual benefit.
Young parents
When you have children and want to secure their education or future goals, the death benefit helps if something happens to you. In addition, the maturity benefit serves as a savings cushion if you survive.
Self-employed or irregular income earners
If your income is not steady, having a plan that gives you something back at maturity can give an added layer of comfort.
People looking for extra features
If you feel like getting more than just financial protection from your plan, then a return-of-premium plan can address that concern.
However, note that if your budget is tight and your main priority is a high cover (at the lowest cost), a plain term life insurance plan (without maturity benefit) may still be more cost-efficient.
In India, a term life insurance plan with maturity benefits offers an attractive combination of protection and savings. You not only secure your family against financial risk but also retain your premiums if you survive the term. While the premiums are higher than plain term plans, the added benefit can be worth it for many. Use a term life insurance premium calculator to understand your costs, match this plan to your financial goals, and choose wisely.
** Tax exemptions are as per applicable tax laws from time to time.
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