My endowment plan is about to mature in August 2017. Do insurers automatically pay the maturity benefit? And, is it tax-free?
Sarbani Chakroborty, Pune
No, insurers do not automatically pay the maturity benefits of endowment or any other survival benefit life insurance policy. However, a few months before the maturity date of policies that pay a maturity benefit, the insurer sends relevant forms and the list of documents that needs to be furnished by the policyholder to claim the maturity benefits under the policy. The policy benefit is paid to the policyholder once the forms are completed and submitted to the insurer, along with the original policy bond. All maturity proceeds under insurance policies are exempt under the provisions of Section 10(10D) of the Income Tax Act, 1961.