InsuranceFinancial Glossary
Maturity Benefit
Definition
The amount paid by an insurance company to the policyholder when a life insurance policy completes its full term (and the policyholder survives the term). Maturity benefits are available in endowment plans, money-back plans, and ULIPs, but not in term insurance policies which only pay on death.
Why It Matters
Insurance policies with maturity benefits (endowment, ULIP) typically offer 5-6% returns — barely beating inflation. Pure term insurance costs 5-10x less for the same coverage, freeing up the premium difference for investment in mutual funds at 12%+ returns. This is the basis of the 'buy term, invest the rest' philosophy.