What Happens When Endowment Policy Matures?

It is important to purchase an insurance plan such as an endowment plan to actively contribute to the financial stability and security of your future. An endowment plan is helpful for yourself, as well as for your family members. With an endowment plan, you are protected against uncertainties in life. 

What is Endowment Plan Maturity?

All endowment plans are purchased for a certain policy term. When the plan reaches the end of the policy term, no matter how many years, the endowment plan is said to mature. If the policyholder survives until the end of the policy term, a maturity benefit is paid to them. If they die before the maturity of the plan, a death benefit is paid out at the time of death.

What is a Maturity Benefit?

The maturity benefit is only paid out at the end of the policy term. It comprises the Sum Assured along with the Simple Reversionary Bonus and any Final Bonuses that may be applicable. The benefit is paid out in lump sum. It is paid out only once at the end of the policy term. All premiums must have been paid for the maturity benefit to be given out.

Other Benefits Under Endowment Plans

The maturity benefit is a primary payout from an endowment plan. All your hard work and savings for years, reach culmination through the maturity benefit. However, there are also several other benefits to take note of:

• Death Benefit 

Endowment plans generally pay out a death benefit. It is given out if the policyholder dies before the end of the policy term, that is before the plan reaches maturity. The death benefit is a fixed amount consisting of the Sum Assured on Death, the simple reversionary bonus and other bonuses applicable. The total death benefit must not be less than 105% of all the premiums paid until death.

• Rider Benefits

Various types of riders are available to be added to base endowment plans for better protection and enhancement of the features. Riders pay out Rider Benefits at the time of contingency they are catered to. 

Endnotes

It is always advisable to keep an endowment plan active till it matures. This is because all your savings reach their maximum potential at maturity and the payout is substantial. It helps sustain your financial security even after the plan ceases to be active.

Also, Read:

Difference Between ULIPs And Endowment Plans

How Are ULIPs Better Than Mutual Funds?

Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive and should research further or consult an expert in this regard.