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No Maturity Benefits

A term insurance plan doesn’t give maturity benefits because it’s purpose is pure protection & risk cover…

I am 26 and recently approached my insurance broker to buy a term insurance policy for 25 years for Rs 50 lakh cover. I was advised not to consider term plans because this policy will mature when I turn 51, at a time when new policies will be expensive for my age. Moreover, at the end of the term, there will not be any return from the policy. What is your advice?-
Rahool Jain

Your move to take on a term insurance plan is apt considering it is pure risk cover, which pays out the sum assured in case of death and does not have any maturity benefits. It is for these features that a term plan is low on cost and high on value. You do not get ant maturity benefits in a pure term plan because it pure protection insurance plan and not a combination plan which mixes protection with investments and savings.

You are right with your observation that when the tenure of this policy ends, you will no more be at an age when insurance will cost you less. However, insurance is not a onetime purchase; the risks that you are exposed to in life increase with different stages in life. For instance as your income starts to rise, you live a different lifestyle which calls for more insurance cover. Likewise as your financial dependents increase, so does your need for a higher cover. You should consider adding more insurance cover as you age. There are term plans that are available for longer tenures than 25 years and you should explore them as well and there are also certain term plans that provide return at the end of the tenure in case the policyholder survives, however, the premium on such policies is high.



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