Differences Between Survival Benefit and Maturity Benefit?

A survival benefit is the policy benefit payout that you get at different stages during the term of the life insurance policy. It means you do not have to wait for the policy tenure to end to get some payout. The periodicity of receiving payouts varies from product to product. These payouts are called survival benefits.

For example, if your policy says you will get 15% of your sum assured after 10 policy years and 15% after 15 policy years, then you will receive these amounts without waiting for the entire policy term to mature.

Please remember, the total sum assured gets reduced by the amount you receive as a survival 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.

Difference between Survival Benefit and Maturity Benefit

Here is a simple table showing the main differences:

What are the Advantages of Survival Benefits?

Here are some simple advantages of taking survival benefits:

• Early Access to Money: You get money during the policy term, not just at the end. This helps if you need funds quickly.
• Helps for interim Goals: You can use the money for education fees, house repairs, medical needs, or other important things.
• Planned Payouts: The survival benefits are fixed and given at pre-decided times, making it easier to plan expenses.
• Reduces Financial Pressure: You don’t have to wait until the policy ends to get policy payout. This removes a lot of financial stress.
• Support at Life Stages: Whether it’s college admission, buying a vehicle, or other milestones, survival benefits give timely support.
• Peace of Mind: You know you will get money at different stages, which makes financial planning smoother.
• Good for Short-Term Goals: If you have short term goals, survival benefits fit perfectly into your needs.

What are The Advantages of Maturity Benefits?

Here are the benefits of getting a maturity benefit:

• 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.
• Financial Security: The money received can create a strong backup for your family’s future financial needs.
• Support for Major Life Goals: You can use the maturity amount for buying a home, starting a business, or saving for retirement.
• Extra Bonuses: If your policy offers bonuses, they get added to the maturity benefit, making the final amount even bigger.
• Stress-Free Planning: Knowing you will get a lump sum after a set time helps you plan better for important milestones.
• Helps in Retirement (H3): Maturity benefits can give you financial freedom after you retire from work.
• No Waiting Once Policy Ends: As soon as you complete the full policy term and pay all premiums, you get your policy benefit easily.

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

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.

Are Survival Benefits Taxed?

Survival benefits are usually tax-free, but in some cases, they can be taxed. If the premium you pay every year is more than 10% of the total sum assured (for policies bought after April 1, 2012), then the survival benefit may be taxed under the Income Tax Act. If the premium is less than 10% of the sum assured, the money you get is tax-free under Section 10(10D). Always check your policy details to know the exact rule that applies to you. Further, for policies issued on or after 1 April 2023, if aggregate annual premium does not exceed INR 5 lakhs for traditional policies, then the survival benefits will be tax free subject to satisfaction of above mentioned conditions.

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.

What are the Essential Advantages of Survival Benefits?

Survival benefits offer you financial support at different stages of your life without waiting for the policy to end. They help you pay for important things like school fees, house repairs, or family celebrations. It is like getting rewards during the journey. You can plan small dreams easily with these payouts. Also, they reduce your financial pressure by giving timely help. Many people prefer money-back policies because they offer these useful survival benefits.

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.