The authentic purpose of any life insurance policy is to provide a protective shield, a defence mechanism against all kinds of life threats related to financial problems.
It is a fact that life eventually comes to an end and one can never plan his/her death but what he/she may leave behind can certainly be planned. Whole life insurance policy is that kind of life insurance that provides life cover literally for the whole life.
What Is Whole Life Insurance?
Like the name of the policy suggests, this type of life insurance gives cover for the whole of the insured person. Now, it is certainly difficult to put a number to a person’s death age.
Therefore, whole life insurance has a term of 100 years for all it’s policies so that the insured is secured for almost the entire lifespan. The sum assured is calculated and fixed when the policy is bought.
Hence, the policy continues with a regular premium instalment paid by the policyholder so that the beneficiary could avail the death benefit after the insured’s death.
If somehow the insured manages to live more than 100 years and the policy is matured before his/her death then, in that case, the insurer pays the maturity endowment amount to the insured along with the bonus ( if applicable ).
Types of whole life insurance plans :
1.Non-Participating Plan – A whole life insurance plan usually includes a saving or investment which ultimately concludes to a bonus amount.
This bonus amount is paid to the insured if he/she lives or to the nominee after the death of the insured. But since this is a non-participating type of whole life plan, there is no bonus amount included in the policy term. The premiums for this type of plan is low and the sum assured is average.
2. Participating Plan – This is a type of plan where the policyholder takes part in the investment process of the insurance company. The premiums paid by the insured are divided and some part of it is invested by the company in various investment funds which most of the times become the bonus money.
This bonus amount is given to the policyholder in different ways depending on the size of the bonus amount. It can be directly paid, added to the death benefit or maturity money or it can be used to reduce the premium payment.
3. Regular Premium Plan – This is a simple whole life insurance plan. The premiums for this insurance policy is fixed to be paid regularly until the insured person is alive.
4. Limited Premium Plan – Unlike the regular premium plan, this plan has a feature where the policyholder chooses to pay the premiums for a limited number of years and not more while the policy term continues to be 100 years or until the insured dies.
Also, because the premium instalments are not regular, the premium amount is relatively higher than usual.
Also Read- Term Insurance
Benefits of Whole Life Insurance
1. Life coverage – Life coverage is literally the primary role of the whole life insurance policy as the policy term fixed for the insured is of 100 years. It guarantees safety and protection for your loved ones after you are gone and offers a great amount of financial support.
2.Fixed Premium Rate – Premiums are the most worrisome pet of any insurance plan and many insurance policies are dependent on a lot of other factors when it comes to evaluating the premium amount. But the whole life insurance plan offers a fixed premium rate which continues for the whole term of the policy without any alterations.
3.Death Benefit – This is one of the most common benefits of all life insurance policies. A death benefit is the amount of money paid to the beneficiary of the policy upon the demise of the insured person. Whole life insurance promises to pay the death benefit as soon as possible along with the additional bonus amount if any accumulated due to the endowment feature.
4.Tax Benefit – Again one the most popular and commonly known benefit of an insurance policy is the tax benefit the policyholder gets after buying a life insurance policy.
All the premiums which are paid for the whole life plan are excluded from the Income-tax and all the death benefit, maturity or bonus amount one gets from the whole life insurance policy is also not included in the Income Tax Credit.
Best Whole Life Insurance Plans :
1. Max Life Whole Life Super – The whole life Plan by Max is a comprehensive life insurance plan aiming to provide a life cover to the insured for 100 years along with additional benefits in the form of bonus from the investment feature of the plan.
It is a policy with a limited premium, meaning the premiums are to be paid for a limited duration and not the whole term of the policy. It comes with an Add-On option where the policyholder can select a few additional features to attach to the plan. Some Add-ons are terminal illness benefit and bonus payout.
Age limit: 18 – 50 years
Policy Term: 100 years
Premium term: 10/15/20 years
Premium cost: Rs. 8,500 – No limit
Sum assured: Rs. 50,000 – No limit
2. SBI Life Shubh Nivesh – SBI is a big brand name when it comes to life insurance companies in the country. Shubh Nivesh is a whole life insurance plan by SBI which has two plan options for the customers to choose from.
It can either be a whole life plan offering protection for 100 years or it can be an endowment plan for which the life cover can be 10/20/30 years depending on the needs.
The plan is a non-linked profit plan, therefore, it also helps in saving money regularly by investment funds of the insurance company. The accumulated bonus is them added to the sum assured or is given to the insured or the nominee of the policy upon its maturity.
There’s also a choice for the payment mode of the sum assured. You can either get it as a monthly income or directly as a whole. All in all, the whole life plan by SBI is affordable life insurance that comes with three Add-On options.
Other important whole life plans in India are HDFC Life Sampoorn Samridhi Plus, IDBI Federal Life Insurance etc.
Thus, whole life Insurance is very important as it provides guarantee that as long as the premiums are paid they will remain in force and all your present and future is securely protected.