Heard of survival benefits in life insurance? Here’s everything you need to know about it.

  • Life Insurance

Life insurance is an interesting product, isn’t it?

Take term insurance, for instance. It may be the simplest kind of life insurance. And yet, it gives the policyholder’s family financial protection when they need it the most. This financial assistance comes in the form of death benefits, which are paid out in case of the policyholder’s demise.

Then there are other kinds of life insurance like savings plans, which give you more than just death benefits.
Like maturity benefits and survival benefits.
Wonder what they are? Come, let’s find out.

What are maturity benefits?

Maturity benefits are paid out to the policyholder at the end of the policy term, when the policy matures. The amount that is paid out as a maturity benefit typically includes a predetermined sum of money, as well as additional bonuses, if any.

For example, say you have purchased a savings plan with a policy term of 25 years. At the end of that period, you will receive the amount guaranteed as a maturity benefit under your policy.

Keep in mind that maturity benefits will only be paid out if:

1. You have paid all your premiums

2. You have survived the policy term

What are survival benefits?

Survival benefits are also quite similar to maturity benefits. However, in the case of plans that offer survival benefits, they are generally paid out to the policyholder at the end of the premium payment term, as opposed to the policy term. This becomes relevant in policies where the premium payment term is different from the policy term.

For example, say you have purchased a savings plan with a policy term of 25 years. The premium payment term, however, is only 18 years. So, at the end of 18 years, you will get survival benefits from your policy. And at the end of 25 years, you will get maturity benefits.

Here as well, you need to keep in mind that survival benefits will only be paid out if:

1. You have paid all your premiums

2. You have survived the premium payment term

What kind of life insurance plans offer survival benefits?

Both term plans and savings plans can offer survival benefits. But not all of them do. It depends on the terms and features of the specific plan that you choose to buy.

In the case of term plans, there are some policies that come with the Return of Premium (ROP) option. What this effectively means is that if you survive the policy term, the premiums will be paid back to you. You could consider this as a kind of survival benefit.

In the case of savings plans, there are money back policies that pay out survival benefits at regular intervals during the policy term, as you saw in the example above. Generally, these payouts start after the premium payment term, and continue at regular intervals for a specific period or till the end of the policy term.

Are survival benefits the same as maturity benefits?

Not really. There are some points of difference between the two. Check them out here.

Maturity benefits

Survival benefits

Paid out at the end of the policy term

Paid out during the policy term

Offered by all savings plans

Offered by only some savings plans

Paid out as a lump sum, as periodic payouts, or as a combination of the two

Generally paid out as periodic payments


Despite these differences, maturity benefits and survival benefits have one thing in common. They both offer tax benefits under section 10(10D) of the Income Tax Act, 1961. As per this section, the amount you receive from your life insurance policy is exempt from tax. This includes both maturity benefits and survival benefits.

What are the advantages of survival benefits?

Survival benefits from life insurance policies offer the following advantages to policyholders.

  • They can act as a source of extra income during the policy term.
  • They help you fulfill life goals that may come up at the end of your premium payment term.
  • They give rewards sooner than later, thereby making it easier for policyholders to enjoy the benefit of their investments.
  • These returns are risk-free, since they are guaranteed and predetermined.
  • And of course, you also get to take advantage of the tax benefits they come with.

Conclusion

Now that you know how survival benefits work, make sure you keep an eye out for this feature if you’re planning to buy a life insurance plan. In case you opt for a policy that gives you survival benefits, ensure that you read the options available and the terms and conditions of choosing each of those options. That way, you can make the most of the benefits under the plan and choose the one that is most advantageous for you.

Read next: EVERYTHING YOU SHOULD KNOW ABOUT HAVING MORE THAN ONE LIFE INSURANCE POLICY

Speaking of benefits, what if you want more of them than what your current plan offers you? Could you get a second life insurance policy? Or a third? Our blog on having more than one life insurance plan gives you all the details.

Read it here

ADV/8/21-22/870

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A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V04

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ABSLI DigiShield Plan

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  • Simple & affordable plan
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