Survival Benefit in Life Insurance
Paid for staying alive to a set date. Here is how it works and what it changes in the rest of the policy.
A survival benefit is money a life insurance policy pays while the life assured is still alive, at set points during the policy term, before or as well as the final maturity payout. The best-known example is a money back policy, which returns part of the sum assured every few years.
It is the opposite trigger to a death benefit. A death benefit is paid because the life assured died; a survival benefit is paid because the life assured survived to a stated date with the policy in force. IRDAI's products master circular makes insurers show "benefits payable on survival including maturity benefit" as a key feature of every product, separately from the death benefit.
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Example: LIC's New Money Back Plan-25 Years
From LIC's brochure (UIN 512N278V03), on a Basic Sum Assured of ₹1,00,000. Survival benefits need all due premiums paid.
End of policy year 5
What is paid
Survival benefit, 15% of Basic Sum Assured
Amount
₹15,000
End of policy year 10
What is paid
Survival benefit, 15%
Amount
₹15,000
End of policy year 15
What is paid
Survival benefit, 15%
Amount
₹15,000
End of policy year 20
What is paid
Survival benefit, 15%
Amount
₹15,000
End of year 25 (maturity)
What is paid
Sum Assured on Maturity, 40% of Basic Sum Assured, plus vested bonuses and any Final Additional Bonus
Amount
₹40,000 plus bonuses
| When | What is paid | Amount |
|---|---|---|
| End of policy year 5 | Survival benefit, 15% of Basic Sum Assured | ₹15,000 |
| End of policy year 10 | Survival benefit, 15% | ₹15,000 |
| End of policy year 15 | Survival benefit, 15% | ₹15,000 |
| End of policy year 20 | Survival benefit, 15% | ₹15,000 |
| End of year 25 (maturity) | Sum Assured on Maturity, 40% of Basic Sum Assured, plus vested bonuses and any Final Additional Bonus | ₹40,000 plus bonuses |
Where Survival Benefits Show Up
- check_circleMoney back plans: a fixed share of the sum assured at fixed policy years, as in LIC's plan above.
- check_circleIncome plans: a regular payout over a set payout period. HDFC Life's Super Income Plan pays survival benefits at the end of each policy year in the payout period, provided the life assured is alive and the policy is in force.
- check_circleMaturity itself: IRDAI's wording often groups the maturity benefit with survival benefits, since both are paid for surviving. Its customer information sheet format lists "survival benefits excluding that payable on maturity" to separate the two.
- check_circlePure term plans pay nothing on survival.
Does a Survival Benefit Reduce the Death Benefit?
It depends on the policy wording, and IC-26 questions test exactly this. HDFC Life's Super Income Plan says that on death during the payout period, the death benefit is not reduced by survival benefits already paid. LIC's Money Back brochure defines the death benefit as the Sum Assured on Death (the higher of 125% of Basic Sum Assured or 7 times the annualised premium) plus vested bonuses, with a floor of 105% of premiums paid, and makes no deduction for survival benefits already paid.
Paid-up and surrender values are different. There, survival benefits already paid are taken off.
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How Paid Survival Benefits Affect Other Values
Guaranteed surrender value
Rule
Floors are a percentage of total premiums paid less any survival benefits already paid (for example 30% in year 2, 35% in year 3)
Source
IRDAI Insurance Products Regulations, 2024, Schedule I 4(A)(a)(1)
Special surrender value
Rule
Must allow for survival benefits already paid
Source
IRDAI products master circular, para 26.4.1
Paid-up sum assured
Rule
May be adjusted for survival benefits paid
Source
IRDAI Insurance Products Regulations, 2024, Schedule I 4(A)(a)(7)
LIC Money Back, paid-up
Rule
Maturity Paid-up Sum Assured = (Sum Assured on Maturity + total survival benefits) × premiums paid ÷ premiums payable, less survival benefits already paid; no further survival benefits are paid separately
Source
LIC brochure, UIN 512N278V03
Savings product overall
Rule
Survival benefits including maturity must give at least a non-zero positive return
Source
IRDAI Insurance Products Regulations, 2024, Schedule I 2(C)(c)
| Value | Rule | Source |
|---|---|---|
| Guaranteed surrender value | Floors are a percentage of total premiums paid less any survival benefits already paid (for example 30% in year 2, 35% in year 3) | IRDAI Insurance Products Regulations, 2024, Schedule I 4(A)(a)(1) |
| Special surrender value | Must allow for survival benefits already paid | IRDAI products master circular, para 26.4.1 |
| Paid-up sum assured | May be adjusted for survival benefits paid | IRDAI Insurance Products Regulations, 2024, Schedule I 4(A)(a)(7) |
| LIC Money Back, paid-up | Maturity Paid-up Sum Assured = (Sum Assured on Maturity + total survival benefits) × premiums paid ÷ premiums payable, less survival benefits already paid; no further survival benefits are paid separately | LIC brochure, UIN 512N278V03 |
| Savings product overall | Survival benefits including maturity must give at least a non-zero positive return | IRDAI Insurance Products Regulations, 2024, Schedule I 2(C)(c) |
When a Survival Benefit Is Booked
IRDAI's 2024 actuarial, finance and investment master circular says the date of recognition for maturity, survival benefits and annuities is as per the policy's terms and conditions, unlike death and surrender claims, which are recognised on intimation. In practice that means when due: HDFC Life books periodical and survival benefits when due, and SBI Life books survival benefits when due. They are shown within benefits paid in the Revenue Account (the policyholders' account).
If a Survival Benefit Goes Unpaid
IRDAI's 2020 master circular lists survival benefit among the payouts that can become unclaimed amounts. Its February 2024 modification narrows this: amounts payable under in-force policies (including reduced paid-up and fully paid-up policies on the due date) are not treated as unclaimed. An unpaid amount counts as unclaimed only when it stays unpaid beyond twelve months from the due date because the insurer cannot contact the consumer.
Exam Traps
Survival benefit is paid for being alive at a stated date, not on death. It is booked when due under the policy terms, not on intimation. Surrender and paid-up values deduct survival benefits already paid; the death benefit may not, depending on the wording. A money back maturity payout is smaller than the sum assured because part of it was paid earlier as survival benefits.
FAQs
What is survival benefit in life insurance?expand_more
An amount the policy pays while the life assured is alive, at dates set in the contract, provided the policy is in force. Money back and income plans pay them; pure term plans do not.
What is the difference between survival benefit and maturity benefit?expand_more
A survival benefit is paid during the term; the maturity benefit is paid at the end of the term. Both are paid for surviving, so IRDAI's wording often groups maturity with survival benefits.
How much survival benefit does an LIC money back plan pay?expand_more
LIC's New Money Back Plan-25 Years pays 15% of the Basic Sum Assured at the end of policy years 5, 10, 15 and 20, then 40% plus bonuses at maturity. Other LIC plans have different schedules.
Is the death benefit reduced by survival benefits already paid?expand_more
Not in the two examples here. HDFC Life's Super Income Plan says so in terms, and LIC's Money Back death benefit formula has no deduction for them. Always check the policy wording.
When does an insurer account for a survival benefit?expand_more
When it falls due under the policy terms. IRDAI's 2024 master circular sets recognition of survival benefits as per the policy terms, and HDFC Life and SBI Life both book them when due.
Do I get survival benefits if my policy is paid-up?expand_more
Under LIC's Money Back plan, no separate future survival benefits are paid on a paid-up policy; they are already built into the reduced Maturity Paid-up Sum Assured.
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