Whole Life Insurance
This life insurance category provides lifetime insurance coverage for policyholder upto his/her 100 years of age.
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What is Whole Life Insurance?
This life insurance category provides lifetime insurance coverage for policyholder upto his/her 100 years of age. So, essentially the insurance coverage is provided till demise, provided the policyholder has paid all the premium amounts in the tenure. However, when the policyholder passes away during the policy tenure, then his/her beneficiaries receive the death benefit. The policyholder can select the sum assured based on his requirements from a range of policies available under this segment from different insurance providers. The policy is also called a permanent life insurance policy, as the policy provides coverage as long as the policyholder lives.
How does the Whole Life Insurance Policy Work?
The policy is a perfect choice for people looking for a life insurance policy with lifetime coverage. With this policy, individuals need not be worried about purchasing alternative insurance policies. One can get both survival and maturity benefits by owning the policy. The premium amount is paid only until the first 10-15 years from purchasing the policy.
For example, when you buy a whole life insurance policy at the age of 35 for an assured amount of Rs 50 lakhs, then the policyholder will have to pay the premium amount until the age of 50. Even though the premium payment is made for 15 years, the coverage will last until the age of 100. It is the main reason why premium for a Whole life insurance policy is comparatively higher than other policies. Based on the individual’s requirements, one has to opt to buy the Whole life insurance plan.
From the premium paid every time, a part of the money goes into insurance, and the rest stays invested in the company. When the invested amount gains profit, the policyholder gets the bonus on it. If the investment continues to accumulate, the policyholder can either withdraw or wait till maturity.
Features of Whole Life Policy
Listed below are the features of buying a whole life policy,
Fixed Premium
The rate of premium does not change throughout the policy tenure. There wouldn’t be a hike or depreciation in the value of the premium amount paid for the policy...
Loan Option
The policyholder can avail a loan against the policy taken after the completion of 3 years of the policy.
Tax benefits
The premium paid is eligible for tax benefits under Section 80C and 10(10D) of the Income-tax act 1961.
Benefits of Whole Life Policy
Protection
The policy provides protection plans to the family members of the insured. If any of the policyholder’s family passed away, a guaranteed sum amount is given along with bonuses (if applicable).
Death benefits
If the policyholder passed away during the policy term, then the death benefit is settled to the beneficiary. The total sum assured is given only when all the premiums are paid during the payment cycle.
Coverage
The policy provides life coverage by which a family would be able to avoid the financial crisis after the policyholder's demise.
Source of Money
The policy could turn out to become the biggest source of money. The money invested as premium is considered worthy savings.
Type of Whole Life Insurance Policy
Participating Whole Life Insurance
In this type of whole life insurance, the premium paid by the policyholder is invested in an investment resource; the income earned in the resource is given to the individual in the form of bonus.
Non-Participating Whole Life Insurance
The concept is entirely opposite to the participating whole life policy. There isn’t any dividend or bonus given back to the policyholder.
Pure Whole Life Insurance
The policyholder has to pay premiums until his/her death. Risk-benefit is provided for a lifetime, and the assured sum is settled only after the policyholder’s death.
Single-Premium Whole Life Insurance
The name conveys everything; the premium amount must be paid in a single payment due. The sum assured in the plan is bigger and settled to the beneficiary of the policy.
Limited Payment Whole Life Insurance
The premium amount must be paid only for a limited time period during the policy tenure, say, 15 or 20 years. Even though the premium is paid for a short premium cycle, the coverage is provided for a lifetime at the same time; the premium amount is comparatively higher.
Why should one Opt for Whole Life Insurance?
There are several reasons why one must buy a whole life insurance policy. They are,
- The plans provide coverage for up to 99 years of age.
- The policyholder can enjoy a tax benefit up to Rs 75000 on the premiums paid.
- The individual can avail loan options by holding whole life insurance for more than three years.
- The plan is much efficient for people who buy it as early as possible.
- The individual will enjoy the benefits for a long run when bought earlier.
- The premiums are considerable while comparing it with the terms of the policy.
Whole Life Insurance Riders
Accidental Death Benefit Rider
The rider option gives an additional sum assured when the policyholder passes away during the policy term.
Disability Rider
An extra sum is paid on account of an accident or sickness those results in permanent or temporary disability. The coverage will vary according to the disability that the individual is affected.
Premium Waiver Rider
If the policyholder passes away or suffers any disability during the payment cycle period, the upcoming payment dues will be waived off, but still, the policy will remain active.
Income Benefit Rider
In the usual whole life insurance scheme, the sum assured will be paid in a single payment settlement. With this add-on integrated, the returns can be received in the form of instalments.
Critical Illness Rider
The rider will help in settling the medical expenses that arise due to critical illness.