What Is an Unmatured Life Insurance Policy?
Life insurance policies have maturity dates. These dates reflect the time it takes for a policy to accumulate the amount of money necessary to pay for the benefits outlined in the policy. A maturity date may also refer to the term of the policy, or how long benefits will be promised for. An unmatured policy, therefore, is a policy which has not reached the end of its policy contract term.
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Term Life Insurance
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A term life insurance policy has a maturity date that lasts from one year up to 30 years. An unmatured policy is a policy falling within this time frame. Term life insurance provides the death benefit only during this time. If you die outside of the policy term, after the policy has matured, then your family receives nothing.
Whole Life Insurance
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Whole life insurance matures on your 100th birthday, except in certain limited instances. The policy pays a death benefit anytime prior to maturity. If you live until age 100, the insurer pays you the death benefit amount, or agrees to keep the death benefit invested in the company's general account until you die. When you die, the insurer pays this money to the beneficiary.
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Universal Life Insurance
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A universal life insurance policy may mature at age 120, though this depends largely on the issuing insurance company. This life insurance policy combines elements of term life and elements of whole life, in that the insurance component is an annual renewable term policy, and the cash value account is somewhat similar to a whole life policy's cash reserve. The death benefit is paid at any time during the contract. These contracts technically mature at age 120, though the policy could theoretically continue forever, since it's designed to function so that the term component is paid out of the cash value. Each year the term policy renews. As long as there is cash in the cash value account sufficient to pay the premiums on the policy, it stays in force.
Exceptions
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Some life insurance policies do not have a maturity date. For example, some whole life policies, called limited pay-whole life, may eliminate the maturity feature of the contract. This may be especially true with dividend paying policies. When the policy's cash value equals the death benefit at age 100, the policy will stop paying interest and instead simply accrue dividends. The insurer will not offer to pay the death benefit at age 100. When you die, the death benefit will be paid to your beneficiaries.
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