whole life insurance

whole life insurance

Whole life insurance policy is known as a type of life insurance plan. A whole life insurance plan provides life insurance coverage to the policyholder for the entire life i.e. till the age of 100 years. If the policyholder pays the premium for the policy on time, then he gets life coverage for the entire life. A whole life insurance policy also guarantees the death benefit to the policyholder. In case of unfortunate death of the policyholder during the policy term, the death benefit is provided to the beneficiary named by the insurance company. The sum insured for a whole life insurance policy can be chosen by the policyholder at the time of purchasing the insurance.

Under the whole life insurance policy, if the policyholder survives till the age of 100 years, then the maturity benefit is provided to the policyholder.

As the name suggests, a whole life insurance policy provides cover to the policyholder as long as he/she is alive. It is also known as Kayam Jeevan Bima Yojana as it provides life cover for whole life. This life insurance policy is provided with the benefit of bonus along with life cover.

In a Whole Life Insurance policy, the policyholder has to pay premiums for the first 10 to 15 years of the policy term. Due to the limited tenure of paying the premium, this premium becomes very expensive.

For example, if you are 25 years old and you opt for a whole life insurance plan with a sum assured of Rs 40 lakhs, you will stop paying premiums at the age of 40 years, but the death benefit will be payable. The amount coverage will be applicable for your whole life.

How Does Whole Life Insurance Work ?

The main function of a Whole Life Insurance is to provide insurance cover to the insured person for his entire life so that he can lead a financially secure life throughout his life and in case of an accidental death during the policy term If he goes, the financial needs of his family can be easily met.

A whole life insurance policy provides death benefit as well as maturity benefit to the insured. One can choose a whole life insurance policy as per their requirement.

In a whole life insurance policy, a part of the premium paid by the life assured is used to provide protection cover to the life assured while the rest of the premium is invested. If there is a profit from this investment, then the policyholder is given a bonus on the amount invested.

Features & Benefits Of Whole Life Insurance Policy

  1. Death Benefit:

If the policyholder taking a whole life insurance policy dies during the policy term, the death benefit is provided to the beneficiary named by the policyholder.

  1. Assured Premium:

In a whole life insurance policy, the premium is fixed for the entire term of the policy and cannot be increased or decreased during the policy term. So if the policyholder pays a premium of ₹ 3000 every month, then he will have to pay a premium of ₹ 3000 only during the entire policy term.

  1. Whole Life Coverage:

This life insurance policy provides life insurance coverage to the policyholder for the entire life i.e. till the age of 100 years.

  1. Periodic Payments:

Maturity benefit is provided to the policyholder on maturity of the whole life insurance policy. The policyholder can receive this benefit as a lump sum or as regular income. The policyholder can choose this option according to his convenience and requirement at the time of taking the policy.

  1. Tax Benefits:

The premium paid by the insured in a whole life insurance policy is exempted under the Income Tax Act. Tax exemption is provided under Section 80C of the Income Tax Act 1961 on the premium paid in it. Apart from this, exemption is also provided on maturity benefit under section 10(10D).

  1. Source of Income :

With the help of a whole life policy, one can make their future financially secure. Through this policy, he can ensure his source of income in future.

  1. Loan Facility:

In a whole life insurance policy, the policyholder can also avail loan facility. If the insured pays the premium for 3 years of the policy, then he can avail a loan facility of a certain amount after 3 years.

whole life insurance

Types Of Whole Life Insurance Plans

  1. Non – Participating Whole Life Insurance : It does not get any kind of dividend nor does it get any kind of bonus facility because the premium paid by the policy holder is not invested anywhere.
  2. Participating Whole Life Insurance : The benefit of bonus is provided in this type of life insurance policy. The premium paid by the policyholder is put into investment by the insurance company and whatever profit is received from this investment is given as a bonus to the insured.
  3. Pure Whole Life Insurance : In a pure whole life insurance policy, premiums are paid throughout the life of the policyholder until his death. After the death of the policyholder, the sum assured is paid in the form of death benefit.
  4. Limited Payment Whole Life Insurance : In this type of whole life insurance policy, the premium is paid by the individual for a specified number of years. During this period the life assured has to pay a fixed policy premium regularly.
  5. Single Premium Whole Life Insurance : In this, the entire premium of the policy is paid to the insurance company in one go.

Whole Life Insurance Riders

Presently most of the insurance companies offer the option of adding different types of riders. Through this, you can further enhance the coverage of your whole life insurance policy. Under a whole life insurance policy, you can opt for the following riders-

  1. Premium Waiver Rider: In this rider, if the policyholder dies in an accident or becomes disabled due to which he loses his source of income, his entire future life insurance premium is waived while the policy is in force.
  2. Accidental Death Benefit Rider: If the policyholder dies in an accident, additional financial support is provided to the nominee through the Accidental Death Benefit rider. This Accidental Death Sum Assured is in addition to the Basic Sum Assured of the plan.
  3. Partial/ Permanent Disability Rider: If an accident causes partial or permanent disability to the policyholder, then through this rider he is provided income for a fixed time frame.
  4. Critical Illness Rider: A critical illness rider covers if the policyholder has to incur medical expenses due to a critical illness.
  5. Income Benefit Rider:Through the Income Benefit Rider, a guaranteed income benefit in the form of installments is provided to the nominee in case of death of the policyholder so that he/she can easily meet his/her day-to-day financial needs.

Best Whole Life Insurance Policy In India

  1. Aegon Life Guaranteed Income Advantage Insurance Plan
  2. HDFC Life Sampoorn Samridhi Plus
  3. IDBI Federal Whole Life Insurance
  4. IndiaFirst CSC SubhLabh Plan (IndiaFirst CSC SubhLabh Plan)
  5. Kotak Premier Life Plan
  6. Max Life Whole Life Super
  7. PNB MetLife Whole Life Wealth Plan (PNB MetLife Whole Life Wealth Plan)
  8. Pramerica Sahaj Suraksha _
  9. Reliance Life Long Savings
  10. SBI Life Shubh Nivesh
  11. Star Union Da – ichi ‘s Jeevan Ashray
  12. Tata AIA Life Insurance Fortune Maxima (TATA AIA Life Insurance Fortune Maxima)

Difference Between Term Insurance And Whole Life Insurance

Whole Life Insurance Policy  Term Insurance Policy
Double benefit of both savings and security  death benefit  only    
Tenure is flexible  and applicable up to  100 years of age    fixed  term 
Investment  of premium in various investment options and  bonus  benefits   no such facility 
Cash value can be used to obtain a loan   there is no such benefit
paying more less  premium  amount    Payment of lower premium amount  
The premium is fixed during the entire policy period    dynamic premium   
Maturity benefit is provided on maturity No maturity benefit is provided in this

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