Maturity Amount

Key Highlights

• Maturity Amount is the whole amount paid to the policyholder or investor at maturity of any form of financial contract.

• Factors Impacting maturity amount include rate of interest, investment tenure and bonus or dividends.

What is Maturity Amount?

Maturity Amount is the whole amount paid to the policyholder or investor at maturity of any form of financial contract. Theoretically, it should be the original amount invested plus the interest, incentive, or return obtained during the investment term.

How to Calculate Maturity Amount?

The maturity amount is dependent on the type of financial product:

• Fixed Deposits (FDs) – It is the principal sum plus the interest accrued.
  Maturity Amount = Principal + (Principal × Rate of Interest × Time)

• Life Insurance Policies – It includes the sum assured and bonuses accrued (if applicable).

• Mutual Funds & SIPs - The amount would be based on the NAV and market movement.

Factors Impacting Maturity Amount

1. Rate of Interest- An increased interest rate will lead to a higher maturity amount.

2. Investment Tenure- Generally, investments with longer tenures result in higher returns.

3. Bonus or Dividends- While some financial products provide extra pay.

Why does Maturity Amount Matter?

• It helps one plan their finances for future requirements.

• It provides liquidity for expenses post-retirement.

• It provides security in life insurance, fixed-income investments.