Maturity & Survival Benefit Claims
What maturity and survival benefits are, how the amount is arrived at under traditional and unit-linked plans, when the insurer must inform and pay, how an assignment affects the payout, and when the proceeds are exempt from income tax.
Maturity and survival benefits
A maturity claim arises when the life assured survives to the end of the policy term and the maturity benefit set out in the policy becomes payable. Survival benefits are different: they are payments made during the term, at the intervals set in the policy schedule, under money-back and similar plans.
Not every policy has either. A pure term plan with no return-of-premium feature has no maturity benefit; if the life assured survives the term, the cover ends and nothing is payable.
How the amount is arrived at
Under a participating endowment or money-back plan, the maturity benefit is the sum assured plus the bonuses added to the policy. In a money-back plan the survival benefits are paid on the dates in the schedule; what the schedule says about the final payment decides the maturity amount.
Under a ULIP the maturity benefit is the fund value: the units held multiplied by the net asset value on the maturity date. It therefore moves with the market until that date.
When the insurer informs and pays
These products fall under the IRDAI (Insurance Products) Regulations, 2024. Under the Citizens' Charter in the Master Circular on Protection of Policyholders' Interests of 5 September 2024, the insurer informs the policyholder of a maturity or survival payment one month before the due date and pays it on the due date. The earlier 2017 regulations said only that intimation must be sent sufficiently in advance.
Where a policy has been assigned to a lender as security for a loan, the lender is entitled to its outstanding dues out of the proceeds, and the balance goes to the policyholder. An absolute assignment is different: it passes all rights under the policy to the assignee. Assignment is governed by section 38 of the Insurance Act, 1938.
Income tax on the proceeds
The exemption is in section 11 read with Schedule II of the Income-tax Act, 2025 (section 10(10D) of the 1961 Act). For a policy issued from 1 April 2012 the yearly premium must be within 10% of the sum assured; the figure is 20% for policies issued from 1 April 2003 to 31 March 2012, and 15% for policies issued from 1 April 2013 on the life of a person with a specified disability or ailment.
Aggregate limits also apply: ₹2,50,000 a year of premium for ULIPs issued from 1 February 2021, and ₹5,00,000 a year for other policies issued from 1 April 2023. Death proceeds are always exempt.
Rules at a glance
A maturity payment on an assigned policy
Illustration, with assumed figures: Gopal's endowment policy matures on 1 December. The insurer writes to him by 1 November about the payment. The maturity amount is ₹8,70,000.
Gopal had assigned the policy to a bank as security for a loan, and ₹2,50,000 is still outstanding. The bank receives ₹2,50,000 and Gopal receives the balance, ₹8,70,000 − ₹2,50,000 = ₹6,20,000, on the due date.
A money-back plan and a ULIP at maturity (illustrative figures)
- Assumptions, for arithmetic only. Money-back plan: sum assured ₹10,00,000, term 16 years; the schedule pays 15% of the sum assured at the end of years 4, 8 and 12, and the remaining 55% with bonuses at maturity; bonuses added by maturity are taken as ₹3,20,000, an assumed figure and not a projection. ULIP: 12,500 units held; NAV on the maturity date ₹48.60.
- Each survival benefit = 15% of ₹10,00,000 = ₹1,50,000. Three are paid, so they total 3 × ₹1,50,000 = ₹4,50,000.
- Remaining sum assured at maturity = 55% of ₹10,00,000 = ₹5,50,000.
- Maturity benefit of the money-back plan = ₹5,50,000 + ₹3,20,000 = ₹8,70,000.
- ULIP maturity benefit = 12,500 units × ₹48.60 = ₹6,07,500.
Result. The money-back plan pays ₹4,50,000 in survival benefits and ₹8,70,000 at maturity on these assumptions. The ULIP pays ₹6,07,500, the fund value on the maturity date.
Key points
- A maturity benefit is paid on surviving the term; survival benefits are paid during the term on dates in the policy schedule.
- A participating plan pays the sum assured plus bonuses; a ULIP pays units multiplied by the NAV on the maturity date.
- The insurer informs the policyholder one month before the due date and pays on the due date.
- On a policy assigned as security for a loan, the lender takes its dues and the balance goes to the policyholder.
- Maturity proceeds are tax-exempt only within the premium conditions of Schedule II; death proceeds are always exempt.
Common misunderstandings
- The final payment of a money-back plan is the maturity benefit, not another survival benefit.
- Maturity proceeds are not exempt in every case: the premium has to be within the Schedule II limits, unlike death proceeds, which are always exempt.
- An assignment as security for a loan is not an absolute assignment: only the lender's dues are taken from the proceeds.
Questions people ask
A 20-year money-back plan of ₹20 lakh pays 20% of the sum assured at the end of years 5, 10 and 15. What do the survival benefits total?
Each is 20% of ₹20 lakh = ₹4 lakh, and three are paid, so ₹12 lakh. The payment in year 20 is the maturity benefit.
How is the maturity value of a ULIP worked out?
Units held multiplied by the net asset value on the maturity date.
Does the policyholder have to file a claim to learn that a policy is maturing?
No. The insurer is to send information about the maturity payment one month before the due date, and the payment is due on the due date.
What this lesson relies on
- IRDAI (Insurance Products) Regulations, 2024
- IRDAI Master Circular on Protection of Policyholders' Interests (5 September 2024) — Citizens' Charter
- Insurance Act, 1938 — section 38 (assignment)
- Income-tax Act, 2025 — section 11 read with Schedule II
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.