Name the type of maturity which will help in maintaining and equilibrium in your present and future life?
Answers
Answer:
Buying life insurance is a necessity to protect your loved ones in case of death, accidents or disabilities that lead to a loss of income. Though you cannot put a monetary value to a human life, the compensatory amount is determined based on the loss of future income. That is why the term 'sum assured' stands for the guaranteed amount that you or your family will receive in case the policy-holders passes away or is disabled.
However, chances are high that the policy-holder completes the term period, and nothing unfortunate takes place. Will the insurance company pay back the policy-holder the premiums he has paid over the years? What about the other life goals you want to achieve, like the education of your children, their marriage, or even a world trip for you and your family?
Under traditional term life insurance policies, there are no paybacks. But if you are looking for a life advantage on an insurance policy, look for a policy with maturity benefits. Most people are unaware of the additional benefits apart from the death and disability benefits.
Types of Maturity Benefit Policies
Most insurance policies with maturity benefits are for a period of 5, 10, 15 or 20 years and not only will your family get the cover in case of a misfortune, but if you survive through the complete policy term, there are advantages to avail. A win-win situation for you and your family.
As compared to term life insurance policies, where you lose the advantage of the paid premiums, if you survive the tenure of the policy, maturity-benefits policies ensures you returns.
Maturity benefits: what you need to know when buying insurance
Types of maturity benefits plans:
Term Life with Return of Premium or TROP plans- These plans are Term Plans with the additional benefit of premiums being returned to the policy holder at the end of the term if the insured survives the policy term.
Endowment plans- These plans combine the benefit of investment and insurance. Funds are usually invested in debt funds so returns are not too high, but the risk is also very manageable. The sum assured (i.e. the sum your family receives in case something happens to you) is usually not very high.
Unit Linked Insurance Plans- Like Endowment plans, these are financial products that give the investor the benefit of both investment and insurance. Since it is a market linked product, potential for risk is higher than traditional life insurance products, and there are also some associated charges. However, these plans give policy holders equity exposure that grows their wealth at a much higher rate of return. These plans also allow partial withdrawals of money which can be used to tackle financial needs as and when they arise.
They help you get the monetary benefit of guaranteed returns (in case of TROP & Endowment plans) since you get the refund of the premiums on maturity of the policy, and of course if the policyholder dies within the period, then death benefits are applicable.
Related: Death Claim: Is it possible to claim from more than one Life Insurance policy?
Advantages of insurance policy with Maturity Benefits
The policyholder can claim the benefits after the policy matures, and the insurance company provides a fixed amount (for traditional products) and a variable amount (for market linked products like ULIPs) after the plan tenure is completed. However, this is only a possibility when the policy is being continued as per the contract terms. Usually, the maturity benefits include a sum of the premiums that have been paid till a fixed date and any other benefits as stated in the policy document.
Initially, the maturity benefits are limited to the total amount paid in premiums, but the amount gradually increases every year, which is why these plans are considered an investment avenue as well as insurance. There is a steady increase in the corpus and at the end of the maturity term the insurance company pays-out the total amount.