Definition
Survival Benefit
A survival benefit is a periodic payout made to the policyholder for surviving to specified milestones during a money-back or similar policy's term.
Survival benefits are the defining feature of money-back policies, paying out a fixed percentage of the sum assured at intervals while the policy runs, with the balance paid at maturity. They provide liquidity during the term rather than only at the end.
Importantly, in most designs the death benefit is not reduced by survival benefits already paid, so the nominee still receives the full sum assured on a claim. The trade-off is a lower overall return because the insurer has paid out cash earlier and invested less of the premium.
Related terms
- Sum AssuredSum assured is the guaranteed amount an insurer pays to the policyholder or nominee on the occurrence of the insured event.
- Money-Back PolicyA money-back policy is an endowment-style life plan that returns a portion of the sum assured at fixed intervals during the term, with the balance plus bonuses paid at maturity.
- Maturity BenefitThe maturity benefit is the amount a savings-linked life policy pays the surviving policyholder when the policy term ends.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.