Definition
Maturity Benefit vs Death Benefit
Death benefit is the payout if the insured dies during the policy term; maturity benefit is the amount received if they survive the term.
In life insurance, the death benefit is paid to the nominee if the policyholder dies during the policy term, while the maturity benefit is paid to the policyholder if they survive until the policy ends. Pure protection plans like term insurance pay only a death benefit (unless a return-of-premium variant is chosen).
Savings-linked plans such as endowment, money-back and ULIPs offer both — a death benefit during the term and a maturity benefit at the end — which is why their premiums are higher than term plans.
Understanding this distinction helps you choose: if you only need to protect dependants, a term plan's pure death benefit gives the most cover per rupee; if you also want a guaranteed return, you pay more for the maturity benefit.
Related terms
- Sum AssuredSum assured is the guaranteed amount an insurer pays to the policyholder or nominee on the occurrence of the insured event.
- 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.
- Term InsuranceTerm insurance is pure life cover that pays your family a large sum if you die during the policy term, in exchange for a low premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.