Whole Life Insurance

What are The Key Features and Benefits of a Whole Life Policy?

Let us see the features and benefits of life insurance whole life policy that you should know before buying the best whole life insurance policy in India.

1. Whole Life Coverage

   These plans provide coverage against death for the policyholder’s whole life, i.e., till 99 or 100 years of age. This guaranteed life cover (sum assured) is paid to the nominee of the policy during the policy term in case of the policyholder’s death. The payout amount can help your family fund your child’s higher education or future wedding, or can be used to secure your spouse's life post-retirement.

2. Death Benefit

   In the event of the unfortunate demise of the life assured during the tenure of the policy, the death benefit is paid to the nominee. The death benefit is paid as a total sum assured amount to the beneficiary/nominee of the policy by the insurance company, provided all the premiums are duly paid. This benefit amount will be paid along with the accrued bonuses (if applicable).

3. Family Support

   The policyholder’s whole life policy will work as a financial backup for the children and the grandchildren after the policyholder's demise. Thus, whole insurance is a great insurance solution for wealth creation and future planning so that one can provide financial security and a good lifestyle to their family.

4. Fixed Premium

   The premium rate of a whole life insurance plan is fixed and does not increase or decrease throughout the term period of the policy. So, suppose the policyholder has to pay a premium of Rs. 2,168 per month for a specific policy. In that case, he/she will continue to pay the same premium regularly for the entire premium payment term.

5. Protection for Life

   Whole insurance is designed to provide life protection to the family of the assured during the policy term. It is done in the form of payment of a guaranteed sum assured along with bonuses, if any, in the case of the policyholder’s unfortunate demise.

6. Tax Benefits

   The policyholder can claim life insurance tax benefits as per the prevailing tax laws under section 80C on the premium paid towards the full life insurance policy. Moreover, the death claims are also tax exempted under section 10(10D) of ITA 1961.

7. Offers Loan Facility

   As whole life insurance provides protection up to 100 years of age, the policyholder can opt for a loan facility against the plan in times of emergency. However, the loan can only be availed if the policy has completed 3 policy years if all the premiums of the policy are duly paid.

Why Should You Buy a Whole Life Insurance Policy?

Here is why you should buy the best whole life insurance policy in India:

Whole Life Insurance Cash Value

A cash value life insurance policy offers a cash value benefit that allows customers to gain wealth creation benefits and save for the future. A certain portion of every premium payment goes into insurance protection, whereas the other is invested to build wealth. The cash value accumulation is faster in the early years of the policyholder’s life compared to the later years, as the portion of the premium that goes into insurance cover increases every year.

Whole Insurance Death Benefit

The exact amount payable on death for a full life insurance policy is usually specified in the policy documents. It may change in the following instances: if the policy is eligible for dividend payments, unpaid policy loans, and additional riders, like accidental death benefit or waiver of premium riders. You can also select the suitable payout option for whole life insurance policy, like lump sum, monthly income, or lump sum + monthly income.

Debt Repayment in Your Absence

In case you have outstanding loans and debts like home loans, business loans, student loans, or car loans, the full life insurance payout can help your family pay off the remaining loan, rather than being burdened with the outstanding amount in your absence. 

Fulfill Financial Goals and Needs

Your family can use the whole insurance payout amount to take care of their financial goals and needs like paying for the child’s future wedding, funding their business endeavours, securing the spouse’s retirement, or any other such goals.

Liquidity in Case of Emergency

In case of a financial crisis or emergency, a full life insurance plan can help you receive urgent funds with its loan facility. A life insurance whole life policy allows you to receive loans against the cash value accumulated during the policy term. As you claim a loan, the death benefit amount decreases accordingly, and you can revive the original sum assured by duly paying off the whole life policy loan amount.

How Does Whole Life Cover Insurance Work?

Let us understand how whole life insurance example works:

Neeraj, a 30 year old non-smoking male, bought a whole life cover insurance from Policybazaar to financially secure his loved ones. He earns Rs. 12 Lakhs per year and, thus, chose the best term insurance plan for 1 Crore with a policy term of 99 years. To enjoy the coverage benefits of the whole life policy, he would have to pay a monthly premium of Rs. 2,168 for the entire policy term. In case he suffers an unfortunate death during this tenure, the insurer will payout the sum assured of 1 Crore to his nominees, which will help them take care of their financial needs.

What are the Different Types of Whole Life Insurance Policy?

A whole life policy ensures the financial stability of the nominee in case of the policyholder’s unfortunate death, whenever it may happen. It means that there is a policy term limit under whole life insurance, and thus, the plan covers the policyholder for his/her whole life (till 99/100 years of age). Most life insurance whole life policy provides a dividend to the policyholder, which helps with retirement. These life policies provide insurance until the death of the assured. Whole life policies are classified into.

1. Limited Payment Whole Life Policy

   Under this option, if you choose a limited payment whole life insurance policy, you are required to pay the premium for a limited time during the policy tenure. In most cases, you can pay the amount for the first 10/20 years and continue to get covered for 99 years. The premium rates for these plans are slightly higher, but the total savings on premiums would be higher than a regular life insurance plan payment. 

2. Single Premium Whole Life Policy

   Under this plan option, the entire premium of the policy is paid in one go or as a lump sum payment at the time of policy purchase. Since the premium is paid all at once, no other premium payments have to be made throughout the policy tenure.

3. Modified Whole Life Insurance

   If you choose a modified whole life policy, you pay different amounts at varying intervals of the policy tenure. In this, the premium rate is comparatively lower at the inception of the term and increases gradually with time. However, regardless of the premium rate, the plan’s insurance coverage and the benefits remain the same for the whole term.

4. Variable Whole Life Insurance 

   A variable whole life policy offers life coverage for the whole policy term, ensuring your family members are protected against any financial uncertainty in case of your absence. In addition to this, this plan also helps in meeting your investment objectives by investing your money.

What is the Difference Between Term Life Insurance And Whole Life Insurance?

Let us briefly understand the difference between a whole life policy and a term insurance policy.

Who Should Buy Whole Life Insurance Plan?

Whole life policy offers coverage for a longer term than a regular term plan and secures the nominee in the event of the policyholder’s unfortunate demise. Salaried and self-employed individuals should plan to provide financial security to their loved ones and family.

• Individuals who want to create a financial cushion for their future generations.

• Individuals who want to secure their family financially and want to create a corpus in the long run.

• Individuals who want to accumulate wealth for retirement should consider buying this life insurance policy.

• Individuals who want to save on their yearly taxes.

What are the Benefits of Buying Whole Life Insurance?

Whole life cover: The plan provides coverage for 99 years, protecting your family members for an extended period. Various individuals have financial dependents in old age, and such a life insurance plan takes care of their financial dependents. 

Level Premium – Your premium amount stays the same throughout the policy term, making it more affordable in the long run. This consistency helps you plan your finances better, as you know exactly how much you'll pay every time.

Tax Benefits– Premiums paid are eligible for tax deductions of up to ₹1.5 lakh under Section 80C, and the maturity benefits are tax-exempt# under Section 10(10D), subject to applicable conditions.

What Are The Whole Life Insurance Riders? 

Listed below are some of the rider options available with the life insurance whole life policy:

1. Waiver of Premium Rider

   Within this rider, if the policyholder is diagnosed with a critical illness or is permanently disabled due to an accident, the future whole life policy premiums will be waived off and the policy will remain active until the policy term ends.

2. Accidental Death Benefit Rider

   Under this rider, the insurer will pay the additional rider sum assured to the nominee in case of the policyholder’s accidental death during the policy term. This payout can help the family take care of their monthly expenses and other financial obligations.

3. Accidental Total Permanent Disability Rider

   In case of total or permanent disability caused due to an accident, this rider will provide the rider sum assured to the policyholder. This payout can be used to pay any of the medical costs required for the suitable treatment of the disability.

4. Critical Illness Rider

   On the diagnosis of a critical illness during the policy term, this rider can help take care of the medical expenses that might incur due to any critical illness that is included in the plan, including life-threatening illnesses like an organ transplant, any severe heart ailment, etc. These diseases could lead to a temporary or even a permanent loss of regular income, and the rider sum assured can help take care of these expenses in a time of financial crisis.

5. HospiCare Benefit Rider

   Under this rider, if the policyholder is hospitalized in general or in the ICU ward, a fixed percentage of the basic sum assured is paid to help the policyholder take care of the medical bills and treatment costs.

6. Terminal Illness Benefit

   With this rider, the insurer will payout the entire or a part of the sum assured in case the policyholder is diagnosed with a terminal illness during the policy term. In case the rider pays a part of the sum assured at terminal illness, the remaining part will be paid to the nominee at the policyholder’s unfortunate demise.

What Are The Factors To Consider When Selecting A Whole Life Insurance Plan?

Here is a list of factors you should consider while selecting the best whole life insurance policy in India for yourself:

• Adequate Life Cover: You should always assess your life cover by taking your family’s requirements into account. Since this amount will be paid to your family in the event of your unfortunate death, the life cover should be enough to cover your family’s financial obligations. You can use a human life value calculator to get an accurate estimate of the life cover amount you are eligible to buy.

• Potential Inflation: Since a life insurance whole life policy provides cover for the whole life, you should take the rising costs and inflation into account while selecting a life cover amount for your family. For example, a cover of Rs. 1 Crore might be enough to cover your family’s needs today, but the amount might lose its value in the next 40 years.

• Early Investment: The premium rate for whole life policy depends on the age of the policyholder at the time of policy purchase. Since the premium rates are low for young individuals, therefore you should always try buying a whole life policy as early as possible to secure a large life cover for your family at low premiums.

• Select Suitable Add-ons: You should always go through the list of available add-on benefits in the whole insurance. You can include these life insurance riders in the base plan to enhance its coverage.

• Choose the Right Insurer: The Indian regulatory body, IRDAI releases its annual report mentioning the CSR of each insurer for every financial year. CSR is the ratio of the number of claims received to the number of claims settled by a company in a financial year. You should compare the CSR values of insurance companies online and go with an insurer with a high CSR value. This ensures that your family’s claim will be settled in your absence.

• Read the Policy Documents: You should always go through the policy documents to understand the details, inclusions, and exclusions of the whole life policy. This avoids any future confusion during claim settlements.

How To Buy Whole Life Insurance Plan From Policybazaar?

Here are the steps to buy this life insurance whole life policy from Policybazaar:

Step 1: Visit the official Policybazaar website and go to the whole life insurance page.

Step 2: Provide your name, contact details, gender, and date of birth.

Step 3: Select 99/100 years as your maturity age or click on ‘Switch to whole life’

Step 4: Enter the information about your occupation type, annual income, educational qualifications, and smoking/tobacco consumption habits.

Step 5: Choose the best whole life insurance policy in India and pay using your preferred mode to complete the process.

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