MATURITY VALUES EXPLAINED

Insurance is a good way to protect yourself and your loved ones against unex-pected financial and emotional strain. However, there is a difference between a mature policy and an immature policy. Benefits are payable upon the death of the insured or on the maturity date. You may not get the most out of your life insurance policy if you aren’t able to let it mature, so understanding the differ-ence is critical in financial planning.

note that there are certain factors that may affect ma-turity values, such as negative market performance, cash withdrawals from the policies, inflation, etc.

A misconception is that a whole life policy will ma-ture when premium payments are no longer due. The premium payment period, however, is not indicative of maturity. Instead, the premium payment period simply indicates the rate at which premiums are paid

Maturity date

The date at which the face amount of a life insurance policy becomes payable (end of the contract term) by either death or other contract stipulation.

What a matured policy means?

When you have a mature policy, you have paid ev-ery premium to a date or age specified in the policy. Having a mature policy means that the insurance company should pay you both the face value and cash value of the policy. You no longer have to make premium payments once the policy is matured and the insurance company has honored its obligation towards you.

What is maturity value?

Maturity value is the amount the insurance company has to pay an individual when the policy matures. This would include the sum assured and bonuses. If the policyholder passes away before the policy matures, the beneficiary gets the sum assured along with the bonus (if any), and if the policyholder is alive when the policy matures, the sum assured as well as any bonuses declared during the term of the policy are paid to him or her.

When does a life insurance policy mature?

It depends on how the policy was designed. A whole life insurance policy, for example, matures when it pays out a death benefit on policies that have no stat-ed maturity date. A whole life policy is a life policy that covers a person for a lifetime.

A mature insurance policy is one in which the guar-anteed cash value of the policy equals the total face value of the policy. Insurance policies gain their cash value from the premiums you pay. In most cases, the longer you pay your premiums, the closer you will get to having a mature policy. Typically, mature in-surance policies refer to most types of life insurance policies (e.g. whole, universal), with the primary ex-ception of term life insurance. Policies usually are set to mature, or endow, when the policyholder reaches age 60 or 65, however, every insurance company is different. The date of maturity depends on your pre-mium rates and the face value of the policy.

Misconceptions about maturity values

Policyholders sometimes have different expecta-tions about maturity values and end up disappointed when the policy finally pays out. It is important to

into the policy. The policy can then be designed to accumulate cash value accordingly so that the poli-cy matures at a given time. The reason for maturity dates is to prevent your policy from continuing in-definitely. This keeps the premiums lower than they would be under a permanent policy, which provides for lifetime payment of premiums.

Making extra payments does not actually change the maturity date but will, however, push back the point at which the insurance account would theoretically have reached maturity value.

Taking out cash values during the term of an insur-ance policy may indeed affect the estimated maturi-ty values negatively. The more you take from your cash value, the more you affect your estimated cash values by reducing them.

What to do when a life insurance policy matures

If you have reached the age where your whole life policy matures, call your life insurance agent or the insurance company to find out how you can lodge a maturity claim.

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