Last Updated:
Taking life insurance could be a difficult task as there are several things a person might consider before purchasing a term plan; here’s the difference between death and maturity benefits to help you.
One of the primary benefits of any life insurance policy is the life coverage it provides to loved ones or family members in the event of the policyholder’s death.
Taking life insurance could be a difficult task as there are several things a person might consider before purchasing a term plan. Most life insurance plans in India provide two services — providing financial security for your loved ones through life coverage, and a long-term savings plan.
When it comes to investing in suitable-term plans, people have different objectives. While those looking for just life insurance coverage will opt for the policy with death benefits, others looking for savings might choose a policy with maturity benefits.
Here is the difference between death and maturity benefits to help you:
Death Benefits
As the name implies, a death benefit in life insurance can be used after the unfortunate incident of the passing of the policyholder. One of the primary benefits of any life insurance policy is the life coverage it provides to loved ones or family members in the event of the policyholder’s death.
When a person passes away, his nominees can file a claim on his insurance policy and enable the death benefit to get the funds provided under his policy.
Although death benefits are often paid in lump sums, some plans allow you to choose period payments to guarantee that your family receives consistent income for years.
Notably, all death benefit payouts are subject to tax exemptions under Section 10(10D) of the Income Tax Act.
Maturity Benefits:
Several people believe that the money they spend on premium plans is wasted if they live to the end of their policy terms. To avoid this, several life insurances include maturity benefits along with basic death benefits. A maturity benefit is the money returned to you if you live until the expiration of your insurance term.
Maturity benefits provide a long-term savings component to life insurance plansandinmost cases, the maturity benefit paid back to the policyholder exceeds the total premium he paid over the period.
While the maturity benefitsare often paidin one single sum after the term,certainplans can provide regular payments in the form of income benefits.
As for the tax benefits, theseare also subject to exemptions under Section 10 (10D) of the Income Tax Act, provided that the policy meets the terms and conditions.
For people with primary goals to save money, it is advised to take a Life insurance plan with maturity benefits.
