What is the Meaning of Maturity Claim in Insurance?

  • April 30, 2024
  • Dushyant Sharma
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It is said that a life insurance’s actual value is known at the claim’s time. The claim is a crucial point of a life insurance policy. At some point, every life policy either matures or receives a death claim, except pure term insurance policies where it expires after reaching maturity.

In this article, we will understand the meaning of maturity claim in insurance, and also discuss maturity benefits and the sum assured.

What is a Maturity Claim?

The claim which can be applied for by the policyholder/life insured after surviving the complete policy term is referred to as a maturity claim. The policyholder after surviving the complete policy term has to file a claim and documents to the insurance company so that he can get maturity benefit. The maturity claim can only be filed at the time of the policy term’s end. 

For example, a man called Rajesh takes an endowment plan with a 15 years’ policy term. Upon the policy’s completion/maturity, Rajesh survives and is eligible for filing the maturity claim. Now, the life insurance company will verify his documents and once the maturity claim is approved, Rajesh will receive the claim amount.

What is the Maturity Factor of Insurance?

If the policyholder’s insurance policy’s term is 15 years, they will get a payout after the end/maturity of the policy term. The maturity amount refers to the sum of the premiums paid up to the maturity period and any additional benefits which are mentioned in the policy. 

What is the Maturity Benefit in Insurance?

Maturity Benefit, also known as Survival Benefit, refers to the return provided to the policyholder upon surviving the policy-term mentioned in their life insurance policy. In case of traditional life insurance, payments are made to the beneficiaries upon the insured’s death. However, in case of a life insurance that provides maturity benefits, the policyholder himself gets to enjoy the financial benefits. Generally, the maturity benefits are associated with endowment plans, money-back policies and some kinds of whole-life insurance. Under such policies, life insurance coverage is combined with a savings or investment component. This enables policyholders to build a corpus until maturity of the policy after which the gathered funds and any applicable bonuses are paid to the policyholder.

What are the Different Types of Life Insurance Plans that offer Maturity Benefits?

There are various kinds of life insurance plans which provide maturity benefits. Life insurance coverage is combined with savings or investment components under these kinds of plans due to which the policyholders are able to build a corpus over time. Let’s discuss these life insurance plans below:

Saving Plans: These are life insurance plans that enable policyholders to grow their retirement amount by providing them with maturity benefits. The maturity benefits can be used by the policyholders to maintain their lifestyle after they have retired from their jobs.

Unit-Linked Investment Plans (ULIPs): A ULIP is a kind of life insurance policy wherein insurance coverage is merged with the investment options. ULIPs provide maturity benefits on the basis of the performance of the underlying investments opted by the policyholder. The investment fund’s value is the determining factor for the maturity benefit at the policy term’s end.

Money Back Policies: In addition to the maturity benefit, these life insurance plans offer payouts in a periodic manner during the policy tenure. A percentage of the sum assured is paid out at regular intervals as ‘survival benefits’ under money-back policies.

Term Insurance Return of Premium (TROP): It is a kind of a term insurance plan that returns your premiums as maturity benefits provided that the policyholder survives the tenure of the policy.

What are the Maturity Benefits in Life Insurance?

The maturity benefits in life insurance policies provide many benefits to the policyholders. Let’s discuss some of these benefits:

Financial Security: Maturity benefits offer a lump payout which can serve as a financial security net or be used to fund higher education, buying a house or starting your very own company.

Goal-Based Savings: Life insurance policies which offer benefits upon maturity allow individuals to save systematically towards their certain financial aims. These policies help policyholders to accumulate their wealth over the policy term.

Tax Benefits: The maturity benefits provided by the life insurance policies have tax benefits. Many countries allow tax exemption on the maturity amount received under specified conditions due to which the policyholders can maximize their returns.

Bonus Additions: Based on the policy’s terms, the insurer may declare terminal or annual bonuses which are added to the maturity amount. These bonuses increase the final payout and add value to the policy.

How to File a Maturity Claim?

Maturity claims are quite simple since you have to file the claim for your very own policy. Generally, insurers intimate you when your policy’s maturity is approaching and ask for the required documents for the policy’s closure.

Generally, the following documents are required to file a claim:

  • Original Policy Document
  • The Policy Discharge Form
  • Proof of your Bank Account and Details (submit passbook copy/canceled check)
  • Your ID and Age Proof

In the rare event of the policyholder passing away before the maturity claim, the value may pass to the legal heirs.

What Is The Difference Between The Sum Assured And Maturity Amount?

Definition of Sum Assured

The term “Sum Assured” in regards to the life insurance policy refers to the guaranteed amount provided by the insurer to the nominee in case of the policyholder’s unexpected demise during the policy period. It is decided during policy inception and is a pre-fixed death payout called the life cover.

The sum assured can include the perks provided on add-on riders and the guaranteed financial benefits provided at the time of policy maturity. Since it is ‘guaranteed’, it is a ‘sum assured’ on maturity.

Definition of Maturity Amount

The term “maturity amount” in regards to the life insurance policy refers to the amount provided to the policyholders by the insurer at the policy tenure’s end. It is a financial benefit given to the policyholder when they outlive the life insurance policy period. In order to avail the maturity amount of the life insurance policy, the policyholder is required to pay the premiums on a regular basis throughout the policy period until the tenure is completed.

Difference Between Sum Assured And Maturity Benefit

Parameters

Sum Assured 

Maturity Benefit

Benefit Type

Sum assured refers to the guaranteed and decided amount at the time of policy’s inception.

Usually, the benefit isn’t exactly guaranteed but a portion of it can be, such as in the savings insurance plans. In such plans, the sum assured on the maturity is decided at the time of the policy’s inception.

Objectives

The sum assured death benefit works as a financial shield to secure the policyholder’s family in their absence.

It helps the policyholders to gather funds to meet their savings and investments objectives so that they can accomplish their financial goals.

Beneficiaries of the Policy

The death payout and benefits can be received by the nominees on the policyholder’s life insurance coverage, and the policyholder can receive the sum assured on maturity.

The policyholders are paid the maturity benefit directly by the insurer at the end of the life insurance policy’s tenure.

Time of Payment

The payment is made to the nominee at any time during the tenure of the policy when the policyholder meets with an unexpected demise.

Payment is made only after the policy tenure has reached its end. 

Factors applicable

On the basis of the premium amount, the sum assured death benefit is determined.

Factors that affect the maturity amount are policy term, interest received, kind of fund alternatives selected for the policies, etc.

Applicability

It is applicable on all life insurance policies. 

It is not applicable on term insurance policies unless the policyholder has specifically opted for the term insurance with the premium of return benefit.

 

Conclusion

Maturity claim can be applied for by the policyholder/life insured after surviving the complete policy term. The maturity benefits in life insurance policies provide an opportunity for the policyholders to reap the benefits of their long-term financial planning. The policyholders get financial security, goal-based savings and tax benefits due to the maturity benefits. Individuals must start early and choose a policy with suitable terms and coverage to make the most of maturity benefits. Additionally, the policy’s performance must be reviewed by the individuals on a regular basis. It is important to stay updated with any changes or additions made by the insurer. A life insurance agent having an IRDA license can be of great help! If you’re interested in starting a life insurance company, feel free to contact Registrationwala for assistance. 


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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