Definition
Maturity Benefit
The maturity benefit is the amount a savings-linked life policy pays the surviving policyholder when the policy term ends.
For endowment and money-back plans, the maturity benefit usually equals the sum assured plus any vested reversionary and terminal bonuses (for par plans) or the guaranteed maturity sum (for non-par plans). For ULIPs, it is the fund value at maturity.
Under current rules, maturity proceeds are tax-exempt under Section 10(10D) only if the policy meets the prescribed premium-to-sum-assured conditions and, for high-premium ULIPs and non-ULIP savings policies, the annual premium thresholds introduced in recent Budgets. Pure term plans have no maturity benefit unless a return-of-premium variant is chosen.
Related terms
- Endowment PlanAn endowment plan is a life insurance policy that combines a death benefit with a lump-sum savings payout at maturity if the policyholder survives the term.
- Survival BenefitA survival benefit is a periodic payout made to the policyholder for surviving to specified milestones during a money-back or similar policy's term.
- SurrenderSurrender is the voluntary termination of a life policy by the holder before maturity, in exchange for the surrender value.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.