Phone NumberTo Buy: 1800-258-5899 (9 am to 6 pm)

|

Emailcustomerservice@canarahsbclife.in

|

Locate BranchLocate Branch

How is the guaranteed maturity benefit calculated?

dateKnowledge Centre Team dateApril 08, 2021 views212 Views
How is the guaranteed maturity benefit calculated?

Life insurance policies ensure the security and well-being of the family of the policyholder, in the unfortunate event of his death. A life insurance policy with maturity benefits adds a lot more to the investment than just the recovery amount. A person must be aware of the best life insurance plan that can be availed in the market.

Although there might be a lot of policies being offered at a cheap rate, the individual must assess the best life insurance plan, which will ensure returns from the policy. Nowadays, many people are opting for an endowment policy to get life insurance benefits rather than just a simple life insurance cover.

Having a life insurance policy with maturity benefits has a two-faced advantage. A policyholder through the term insurance plan is insured a guaranteed amount, but in the case of survival of the policyholder gets different benefits on the maturity of the policy, which are more than what was initially guaranteed.

What are the maturity benefits?

The claim of the policyholder on the maturity of the policy is categorized as maturity benefits. The only requirement to claim the maturity amount is to continue with the policy until the term of the contract is completed. On completion of the term, the insurance company provides the policyholder with the guaranteed benefits of a life insurance policy along with the maturity sum, which is the multiple of the premiums paid up to that time.

What are the actual benefits?

The guaranteed life insurance benefits gradually add up to the total premium paid by the policyholder. The policyholder gets back the premium paid up to the time of completion of the maturity period, but at the same time, he also gets additional benefits. These additional benefits are already conveyed to the policyholder by the insurance company through its terms and conditions. It is the bonus which the policyholder gets at the end, and the composition of the bonus only gets bigger and bigger.

How to calculate maturity benefits on your life insurance?

People opting for life insurance policies with maturity benefits often find it cumbersome to predict the outcome of their investment. Banks provide a straightforward policy for their accounts and other transactions. However, the benefits of a term insurance plan can sometimes be difficult to fathom. Let’s go through the steps of calculating the maturity benefits available with any insurance plan.

Read the terms and condition thoroughly

You must be through with the terms and conditions under which the insurance company is proving the maturity benefits. Once you have gone through the T&C, make a table like the one given below.

Year Premium Charges Final Amount Interest/Bonus Balance

Premium is the amount paid by the policyholder to the insurance company. The charges are deducted by the insurance company or by the bank, or the Government as the case may be. After deducting the charges, the amount of money remaining is the final amount on which the interest is charged, and the balance is the amount credited to the account at the end of every year.

Calculate your maturity benefits

Charges do not remain the same throughout. They differ from year to year and from company to company. Where some companies change their rate of interest and premium every year, some provide more stability with their charges. All the charges must be subtracted from the amount from the premium to determine the final amount. All the interests and bonuses received are to be added, but the base amount must be determined first.

Repeat the calculations

The calculations must be repeated year after year until the maturity date arrives. But the years must be carefully added to the final amount.

Year Premium Charges Final Amount Interest/Bonus Balance
1. P1 X P1-x y (P1-x)+y=B
2. P2 x2 (P2-x2)+B y2 (P2-x2)+B+y2=C

If policy matures in ten years, then the value of the balance column when the year column shows ten will be their maturity benefits. To calculate your net returns subtract all the premiums paid from the amount of maturity benefit.

Variable additions

Sometimes there may be some variable additions to the amount. Unlike the interest and the bonuses, which are assured payments, these variable amounts cannot be predicted, and their payment is unsure. Therefore, these variables should not be considered while calculating the final maturity amount. Only the guaranteed amongst must be considered while planning the long-term investment.

When do you get the maturity benefits if you have a life insurance policy?

Maturity claim arises only on the completion of the life insurance policy. When a policy completes its full tenure, the amount settled towards the life assured is the maturity benefit of that policy. Different insurance companies have different terms and conditions which have to be followed if the maturity amount is to be claimed.

The only prerequisite which must be followed is that the term of the policy must be completed and all the premiums should be duly paid, and the policy must have been continued in its due course without any interference.

To claim the maturity benefit, the policyholder must fill up a policy discharge form. The money can also be paid before the maturity date if the policy form is paid well before the date of maturity of the policy. Normally, the insurance companies settle the claim well in advance of the date of maturity.

People opt for a life insurance policy to ensure that even after their demise, their family and their needs are looked after. A life insurance policy with maturity benefits offers the same security that comes with a normal term insurance plan, but it also adds the option of additional returns in case the policy matures. It offers a double investment to the policyholder. Keeping this in mind, many people invest in both the provident fund for long-term benefits and in term investment plans where the rate of premium is low.

Related Articles

Browse by Categories

Get a Call Back

Do you want us to call back Please fill the form below

Annual Income (In Lacs)

Our Products

TERM Insurance PLAN

TERM Insurance PLAN

Whole life cover option available

Increase your life cover with changing life stages

Return of premium & in-built protection options

Multiple premium payment options

Avail tax benefits on premiums paid as per tax laws

ULIP PLAN

Unit Linked Insurance Plan

8 funds and 4 portfolio strategies to invest

Loyalty additions and wealth booster

Return of Mortality Charge is available on Maturity under all three cover Options

Flexibility of switching between the fund options to take benefits of market movements or change in risk preference

Pos Easy Bima Plan

Top Benefits

Hassle free

Get double life cover in case of accidental death

Choice of flexible premium payment and policy term

Avail tax benefit on premium paid

Frequently Asked Questions (FAQs) for Life Insurance

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of www.canarahsbclife.com.

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age:It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chances of contracting diseases is low. Young people also opt for policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender:The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits:The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term:Policy terms are also taken into consideration by insurers while deciding the premium amount. Policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation:The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Oriental Bank of Commerce Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physicianâ s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence. There are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: An insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the policy, the insurance companies generally pay 80% of the total premiums paid.

Buying life insurance online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. Online insurance policies also offer higher benefits. Customers should, however, buy online policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one policy to increase the cover or avoid claim rejection. In case of multiple policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In the case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in the case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term. The family receives the death benefit. In the case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment options are chosen the policy works as a source of regular income.

It is a popular misconception that life insurance is only for accidental deaths. A term life insurance plan like iSelect also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy life insurance in your early 20s because it’s is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy life insurance at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

Call BackCall Back Pay PremiumPay Premium
Chat
Back to top