Differences Between Survival Benefit and Maturity Benefit?

What Is Maturity Benefit?

A maturity benefit is the lump-sum or periodic payment of policy benefit, which the life insurance company promises to pay you at the end of your policy term. When you finish paying all the premiums and survive the policy tenure, you get a lump sum amount as maturity benefit. This amount includes the basic sum assured and sometimes bonuses if declared.

The maturity benefit is the payout you receive from the life insurance company upon successful completion of the policy term, as per the terms and conditions of the plan.

 

What Is Survival Benefit?

A survival benefit is a way for life insurance policyholders to receive a portion of their policy’s value before the policy reaches its full term. Instead of waiting for the end of the policy term, you receive scheduled payouts at various stages, which can help manage necessary life expenses or short-term financial needs, such as education fees, home renovations or unexpected medical costs.

For example, if your plan offers a 20% survival benefit after 10 years, you can access that amount without waiting for the policy to mature. The insurance company predetermines these payouts, which are clearly outlined in your policy document.

The survival benefit* received reduces the total sum assured payable at the end of the policy term; therefore, plan your long-term financial goals and final payout expectations accordingly.

*This is subject to policy terms and conditions.

 

Difference between Survival Benefit and Maturity Benefit

Here is a simple table showing the main differences:

 

What are the Advantages of Survival Benefits?

1. Early Access to Funds: You can receive periodic payouts during the policy term, providing financial assistance even before the policy matures. This feature can help you manage expenses such as education fees, medical bills or home repairs.
2. Better Financial Planning: The fixed intervals and amounts of survival benefits can let you schedule expenses like tuition, medical bills or home repairs with certainty.
3. Reduced Stress: Receiving payouts in form of survival benefit during the policy term can ease the financial pressure, as you don’t have to wait until the policy’s maturity.
4. Support for Life’s Milestones: You can use the payouts to fund your child’s education or purchase a vehicle.
5. Complementary to Long-Term Goals: In addition to monetary support for immediate expenses, survival benefits can also help you achieve long-term objectives, such as retirement planning.

 

What are The Advantages of Maturity Benefits?

1. Big Lump Sum Payment: You get a large amount of money once the policy term ends in lumpsum or installment, helping you achieve big dreams.
2. Financial Security: The money received can create a strong backup for your family’s future financial needs.
3. Support for Major Life Goals: You can use the maturity amount for buying a home, starting a business, or saving for retirement.
4. Extra Bonuses: If your policy offers bonuses, they get added to the maturity benefit, making the final amount even bigger.
5. Stress-Free Planning: Knowing you will get a lump sum after a set time helps you plan better for important milestones.
6. Helps in Retirement: Maturity benefits can give you financial freedom after you retire from work.
7. No Waiting Once Policy Ends: As soon as you complete the full policy term and pay all premiums, you get your policy benefit easily.

 

Key Takeaways

1. Understanding the differences between survival benefits and maturity benefits enables you to select a policy that can address both short-term expenses and long-term objectives.
2. Survival benefits allow you to access money during the policy term*, enabling you to cover urgent costs, such as education or medical bills, without having to dip into your savings.
3. Maturity benefits provide a lump sum or regular payout at the end, which you can use to buy a house, fund your child’s higher education, or create a retirement corpus for your family.

*This is subject to policy terms and conditions.

 

Conclusion

Now that you know the difference between survival benefit and maturity benefit, it is easier to choose the right life insurance policy. If you prefer getting some money at different stages of life, a survival benefit plan can be good for you. But if you want a big amount at the end to meet big dreams, you should look for a plan offering a strong maturity benefit. Understanding survival benefit vs maturity benefit helps you make a wise decision for you and your family’s financial future. Always read your policy documents carefully and plan according to your life goals.

 

FAQs

 

1. Who decides the amount of Survival Benefit?

The amount of survival benefit is as per the terms of the life insurance policy. It is fixed by the insurance company and clearly written in your policy document. Usually, it is a certain percentage of the sum assured. For example, they may say you will get 15% of your total cover after 10 years. You cannot change this amount later. So, it is important to check and understand it carefully before buying the policy.

 

2. Can both Survival and Maturity Benefits be Received at the Same Time?

No, you cannot receive both the survival benefit and maturity benefit at the same time. Survival benefits are paid during the policy term at fixed times (like after 5 years or 10 years). The maturity benefit is given only at the end of the policy term when your plan finishes, provided all due premiums are paid. If you have already taken some survival payouts, the final maturity amount may be lower because some money has already been paid to you earlier.

 

3. When Can You Claim Maturity Benefits?

The policyholder can obtain the maturity benefit after completing the entire duration of the policy term. Your policy receives the maturity benefit after your complete payment of premiums and survive the policy tenure. The insurance company offers both their promised payment and possible bonuses if any, to policyholders who finish their term. When requesting payment, you need to provide ID proof and your policy.

 

4. Why is term insurance without maturity benefits cheaper?

Term insurance offers pure life cover without any payout if the life assured survives the term. Since it doesn’t include a savings or investment component, the premiums are much lower than policies with maturity benefits.