Most of the insurance policies have a specific tenure. The date at which your life insurance policy matures, i.e., comes to an end is known as the maturity date of the policy.
On the maturity date, you are liable to receive all the maturity benefits.
For example, if you have taken a savings plan for 10 years in 2020. Then after the 10th year, that is 2030, your policy will cease to exist and you will get the maturity benefit.
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When selecting a life insurance policy, it’s essential to consider plans that offer maturity benefits. Unlike term insurance, which provides a payout only in case of the policyholder’s demise, these policies ensure that you receive a lump sum upon surviving the life insurance maturity date. Here are some popular options:
Claiming the life insurance maturity amount is a straightforward process, provided you follow the right steps. Once your policy reaches its life insurance maturity date, the insurer pays out the maturity benefit as per the policy terms. Here’s a step-by-step guide to help you claim the amount hassle-free:
The first step is to verify your life insurance maturity date. You can find this in your policy document or check with your insurer. Insurance companies usually notify policyholders in advance about the upcoming maturity.
To claim the maturity amount, you need to submit certain documents, including:
Original policy document
Identity proof (Aadhaar Card, PAN Card, Passport, etc.)
Bank account details for direct transfer
Duly filled discharge form provided by the insurer
Your insurer will send a discharge form before the life insurance maturity date. Fill in the required details, sign it, and submit it along with the necessary documents to the insurer.
Once you submit the documents, the insurance company will verify them. This process ensures that all details match their records and that there are no discrepancies.
After successful verification, the insurer will transfer the life insurance maturity amount directly to your bank account. The payout usually happens within a few working days of the policy’s maturity date.
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When investing in financial instruments like life insurance policies, one crucial aspect to consider is the life insurance maturity date. The maturity date refers to the time when the policyholder receives the guaranteed payout, provided they have survived the policy term. The maturity period can vary based on the type of insurance or investment plan. Below are the different types of maturity dates:
Some permanent life insurance policies offer a Maturity Extension Rider (MER), allowing policyholders to extend the maturity date beyond original.
Source: elcomutual
The life insurance maturity date plays a crucial role in determining when a policyholder receives the benefits of their policy. It is the pre-decided date when a life insurance policy reaches the end of its term, and the insurer disburses the maturity amount if the policyholder survives the tenure.
Understanding the importance of the maturity date is essential for ensuring optimal financial benefits:
When purchasing a life insurance policy, it is essential to understand the terms life insurance maturity date and surrender value. These terms determine the benefits you receive from your policy and can impact your financial planning. While both are associated with policy payouts, they differ in how and when the amount is received.
| Feature | Life Insurance Maturity Date | Surrender Value |
|---|---|---|
Definition | The date when the policy term ends and benefits are paid | The amount received if the policy is terminated before maturity |
When is it paid? | At the end of the policy term | Anytime after the policy acquires a surrender value |
Amount received | Sum assured + Bonuses (if applicable) | A portion of premiums paid (varies based on policy term) |
Impact on benefits | Full benefits are received | Benefits are reduced due to early termination |
Applicability | Endowment, money-back, and some whole-life policies | Available after the policy has acquired a surrender value |
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When your life insurance maturity date arrives, you may receive a lump sum payout from your insurer. However, it's essential to understand the tax treatment of such proceeds. The taxation of life insurance maturity benefits depends on several factors, primarily the premium amount and policy terms.
Under Section 10(10D) of the Income Tax Act, the maturity proceeds of a life insurance policy are entirely tax-free if:
The annual premium paid does not exceed 10% of the sum assured (for policies issued after April 1, 2012).
The annual premium paid does not exceed 20% of the sum assured (for policies issued before April 1, 2012).
The policy is not a Keyman Insurance Policy (a policy taken by a company on the life of its employee).
If the premium paid exceeds the prescribed limit (10% or 20% of the sum assured), the life insurance maturity proceeds become taxable. In such cases:
The payout is added to your total income and taxed as per your income tax slab.
A TDS (Tax Deducted at Source) of 5% is applicable on the net maturity amount under Section 194DA if the payout exceeds ₹1 lakh.
The maturity date in a life insurance policy marks the completion of the policy term, ensuring financial benefits to the policyholder. Whether you have an endowment plan, a ULIP, or a money-back policy, understanding the maturity terms helps in better financial planning. Make sure to review your policy documents and consult a financial advisor if needed to make the most of your maturity proceeds.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
