Total financial payout paid to the nominee upon the unfortunate demise of the life insured.
Death Benefit is the agreed financial amount payable by a life insurance company to the designated nominee upon the unfortunate death of the policyholder during the policy term. In term insurance, it equals the Sum Assured plus rider payouts. In participating endowment plans, it includes Sum Assured plus accrued bonuses.
Karan has a ₹1.5 Crore term plan with a ₹25 Lakh Accidental Death Rider. In the event of an accidental demise, his nominee receives a total Death Benefit of ₹1.75 Crores tax-free.
Maturity benefit is paid if the insured survives the term. Death benefit is paid only upon the demise of the insured.
Many policyholders misunderstand this clause until a claim actually occurs. Always verify the exact definitions in your policy wording schedule rather than relying on verbal marketing summaries. Disclose all material facts truthfully at the time of proposal to help ensure smooth claim assessment without non-disclosure issues.
Death benefits are 100% tax-free under Section 10(10D) of the Income Tax Act, 1961.
Ensure your death benefit is large enough to support your family's lifestyle for 20+ years.
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