What is the definition of maturity in a life insurance policy context?

In the context of life insurance, maturity refers to the point at which the benefits of the policy come into effect, typically when the insured either reaches the end of the policy term or passes away. This means that the policy has fulfilled its primary purpose by delivering benefits to the insured or their beneficiaries.

When the insured outlives their policy (for example in a term life insurance policy that expires), it signifies maturity in the sense that the policy has completed its contract term. Conversely, if the insured passes away during the term, then the death benefit is paid out, which also marks the maturity of the policy.

The other answer choices do not accurately capture the essence of maturity in a life insurance policy. A transformation into a critical illness plan does not align with the typical definitions used in life insurance policies. The cash value being paid out pertains more to permanent life insurance products with cash value components but does not define maturity alone, as maturity encompasses the overall outcome of the policy, whether through death or the end of the term. Lastly, an increase in coverage amount is not an inherent feature of maturity; rather, it could be a characteristic of a different policy provision or rider.