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Getting a life Insurance policy has never been easier. One just has to choose a coverage plan and pay regular premiums to enjoy the benefits of the policy. However, life insurance policies offer several benefits apart from the death benefit.
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Two such benefits are survival benefits and maturity benefits. While these two might seem the same, there is a vast difference between the two. This article will delve deeper into the difference between the two.
Survival Benefits are paid out to the policyholder in certain intervals during the policy term. These benefits are characteristic of money-back life insurance policies where a portion of the sum assured is paid back to the policyholder at regular intervals.Survival benefits in life insurance are separate from the maturity benefit and are paid out as ‘survival’ incentives, offering financial assistance at various stages during the policy term. These benefits can be used to meet short term needs such as medical expenses or household rent, etc.
Term Plans
Maturity Benefit refers to the lump sum amount that is transferred by the insurance company to the policyholder for outliving the policy term. In other words, such a transfer happens on the expiration date of the policy. Generally, the maturity amount meaning refers to the sum of the premiums paid upto that time and the additional benefits which the insurance company chooses to give to the policyholder.
Therefore both survival benefit and maturity benefit offer financial assistance to the policyholder but at different stages of the policy term.
Note: Term insurance plans do not offer any maturity benefits.
| Parameter | Survival Benefit | Maturity Benefit |
| Definition | Payments made to the policyholder at specified intervals during the policy term, provided the policyholder is alive. | Maturity Benefit refers to the lump sum amount that is transferred by the insurance company to the policyholder for outliving the policy term. |
| Purpose | To provide financial support during the policy term. | To offer a lump sum amount at the policy’s maturity as a long-term savings mechanism. |
| Payment Timing | Paid at regular intervals during the policy term | Paid at the end of the policy term upon maturity of the policy. |
| Policy Continuation | The policy typically continues even after the payment of survival benefits. | The policy usually terminates once the maturity benefit is paid. |
Regular Income Stream:
These benefits provide a steady income at set intervals, which can help manage periodic financial needs or achieve specific goals.
Financial Planning Aid:
They can be integrated into financial planning for anticipated costs such as children’s education, weddings, or significant anniversaries.
Policyholder Incentive:
These benefits encourage policyholders to maintain their policy, as they are only payable while the policy remains active.
Emergency Fund:
They serve as a source of emergency funds in financial crises without requiring the entire policy to be canceled.
Flexibility in Use:
Survival benefits offer the policyholder the freedom to use the funds for any purpose.
Liquidity:
They provide liquidity during the policy term, which is especially useful in long-term policies.
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Steady Income Stream:
Maturity benefits offer a predictable payout at the end of the policy term, which can help manage ongoing financial needs or achieve specific goals.
Financial Planning Support:
They can be planned for future expenses like education, weddings, or significant milestones, aiding in effective financial management.
Policyholder Motivation:
These benefits incentivize policyholders to keep their policy active, as they are only received if the policy remains in force throughout the term.
Emergency Resource:
Maturity benefits can provide financial relief during unexpected emergencies without requiring the policyholder to cancel the policy.
Flexible Utilization:
The funds from maturity benefits can be used for any purpose, offering significant flexibility to the policyholder.
Enhanced Liquidity: They improve liquidity during the policy term, which can be particularly advantageous in long-term policies.
While both survival and maturity benefits offer valuable financial assistance, they serve different purposes and occur at different stages of a life insurance policy. Survival benefits provide interval payouts during the policy term, aiding in short-term financial needs and offering flexibility, liquidity, and motivation to keep the policy active. On the other hand, maturity benefits offer a lump sum at the end of the policy term, supporting long-term financial goals and providing a payoff upon policy expiration.
Note: You should also check the term life insurance benefits if you are planning to purchase the term insurance plan.
Note: You may also like to read about term insurance.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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