What Is A Whole Life Insurance Policy?
The popularity of life insurance policies has increased manifolds because people have become more cautious these days and they want to secure their lives in the best possible ways. A whole life insurance policy is a simple life insurance policy that offers you coverage for your entire life (up to 100 years) provided you pay your premiums on time.
A policyholder is free to withdraw money from the policy at any time. Under a whole life policy, if the policyholder lives up to 100 years, then he/she will receive the sum assured along with applicable bonuses from the company as a maturity benefit.
Types of Whole Life insurance Policies
The markets are flooded with various types of whole life plans. Depending on your requirement, choose the best whole life insurance policy to meet your specific requirements.
- Non-participating whole life insurance
This whole life insurance policy comes with lower premium payments and thus, doesn’t burn your pocket. Since this type of policy is non-participating, hence you don’t expect any bonuses.
- Participating Whole Life Insurance
This type of whole term life insurance policy offers survival benefits and bonuses to policyholders. A part of the premium received is invested by life insurance companies and thus, the profits earned by insurers are paid as bonuses to policyholders. A policyholder can use also use the bonus received to purchase additional insurance coverage to increase their coverage amount.
Apart from these two categories, there are also several other types of whole life insurance policies that a policyholder can purchase.
- Regular Premium Whole Life Insurance
Under this type of policy, the insurer needs to pay premiums till the time he/she is alive.
- Limited Payment Whole Life Insurance
This is the best whole life insurance, where the policyholder needs to pay premiums for a limited period (10 years, 20 years, etc.) but they will receive coverage till lifelong. Since policyholders are paying for a limited time, hence the premiums are higher than other regular premium whole life insurance plans.
- Single premium whole
As the name suggests, here the policyholder needs to pay the premium amount in a single lump sum. After that, policyholders don’t need to pay any premiums. This type of whole life plan is considered an investment insurance product.
Who should purchase a whole life insurance policy?
- Young professionals who have started their careers can choose this type of policy to secure their future
- A person who is looking for wealth creation opportunities for investment
- An individual who wants to accumulate an adequate amount for his/her retired life
Eligibility Criteria for a Whole Life Insurance
The maximum and minimum entry age for this type of policy differ from insurer to insurer. Before making any commitments, check with your insurance provider and go through the policy documents.
Whole Life Insurance Policy Riders
Some common riders that come with whole life policies are critical illness riders, accelerated sum assured riders, hospital cash riders, partial/permanent disability riders, premium waiver riders, accidental death & dismemberment riders, and so on.
Some Intriguing Benefits of a Whole Life Insurance Policy
- Lifetime Coverage
A whole life plan offers coverage for the entire life to a policyholder. Most insurance policies offer coverage for a particular period. Moreover, other life insurance policies are not budget-friendly and will come to an end after some time. But if you purchase a whole life insurance policy, even if you die, your beneficiary will get a hefty amount from the insurer. If you survive the period, you will receive the benefits.
- Assurance of Coverage and Periodic Payments
The survival benefits will keep enhancing with time. If you choose a limited premium payment term, you will receive lifetime coverage along with guaranteed level premiums. Moreover, your premiums will be constant throughout the policy tenure period. You will receive a guaranteed sum assured from your insurer. Based on the performance, the company will pay bonuses. Some insurance providers also offer benefits starting from the end of your premium term till the policy matures.
- Tax Benefits
You are eligible for tax benefits towards all your paid premiums under section 80C of the Income Tax Act. Your maturity amount is also exempted from the tax under section 10(10D) of the Income Tax Act, 1961.
- Acts as your Cash Source
Many financial advisors often recommend that a person must keep his/her 6-8 months’ living expenses in the form of liquid assets to combat any untoward situations. It would be difficult for many Indians to maintain huge cash while meeting retirement and other saving goals. If you purchase a whole life insurance plan, you will receive a hefty amount at the end of your premium payment term.
- Loan Options
The surrender value of the policy will also enhance time. As a policyholder, you can take loans against the policy’s surrender value whenever you need. This is a better option than taking loans against home or retirement accounts.
- Your dependents will enjoy the benefits of the policy
The return that you will receive at the end of your policy term will offer financial assistance to you and your family. This plan is advantageous for individuals who want to pass on a legacy to their family.
Some Popular Whole Life Insurance Policies in India
Let’s take a look at some of the best whole term life insurance policies offered by some whole life insurance companies:
1. ICICI Pru Whole Life
- Survival benefits (sum assured and bonuses) are given during the policy tenure
- Life cover benefit (your beneficiary will get twice the sum assured along with the bonus) is offered
- An additional sum assured is offered after completion of the premium payment term or at maturity
- At the end of the financial year, the regular bonus is offered
- To enhance coverage, policyholders can opt for riders
2. Max Life Whole Life Super
- This policy plan offers guaranteed lifetime protection
- Flexible premium payment and bonus
- Policyholders can choose riders
- The policy comes with terminal illness benefit
- Once the policy matures, the policyholder will get maturity benefits
- Your beneficiary will receive the death benefit in case of your sudden demise
3. SBI Life Subh Nivesh
- Maturity benefit is offered as per your selected option
- Under endowment and endowment with whole life option, the death benefit is offered
- A deferred maturity payment option is available
- Policyholders can choose riders
A whole life insurance policy is the best one that helps you to lead a healthy and secure future. A whole life policy offers both cover and bonuses. Though various whole life insurance policies are available in the market, you should prudently choose the best one as per your requirements.