A whole life policy is a type of life insurance that provides guaranteed death benefits during the entire life of the policyholder. The coverage is extended for as long as the insured lives, as long as the premiums are paid up and the policy is not surrendered. These plans are designed to cater to those who do not want a fixed tenure, but rather have insurance cover till whenever they meet their demise. The policy will also build up a cash value which makes the premiums higher than some other plans.
There are many whole life insurance policies available in the Indian market. These policies cater to varied needs of customers and their families. Depending on your requirements, you can choose from a wide range of policies. To make an informed choice, portals such as BankBazaar give the customer the opportunity to view and compare various policies. Some of the top policies have been listed below:
|Whole Life Plans||Entry Age||Maturity Age||Minimum Sum Assured||Policy Term||Premium Paying Term||Minimum Premium||Maximum Premium|
|SBI Life - Shubh Nivesh||18 years to 50 years||100 years||Rs.75,000 (x1,000)||100 years minus age at entry||Single Premium or Same as policy term. Payable as Single Pay, Yearly, Half-yearly, Quarterly, Monthly||Single Pay - based on minimum sum assured. Yearly - Rs.6,000 Half-yearly - Rs.3,000 Quarterly - Rs.1,500 Monthly - Rs.500||No limit subject to underwriting approval|
|Max Life Whole Life Super||18 years to 60 years||100 years||Rs.50,000||100 years minus age at entry||10 years, 15 years or 20 years. Payable monthly, quarterly, bi-annually or annually||Rs.8,500 p.a. Excluding taxes and other charges||No limit subject to underwriting approval|
|IDBI Federal Lifesurance Whole Life Savings Insurance Plan||18 years to 55 years||100 years||No limit subject to underwriting approval||100 years minus age at entry||12 years up to 30 years. Payable monthly, quarterly, bi-annually or annually||Rs.10,000 p.a. (Rs.12,000 p.a. for monthly mode)||No limit subject to underwriting approval|
|HDFC Life Sampoorn Samridhi Plus - Whole Life Insurance||30 days to 60 years||18 years to 75 years with an option to extend up to 100 years||Rs.65,463||15 years to 40 years||Policy term minus 5 years. Payable monthly, quarterly, bi-annually or annually||Monthly -Rs.1,000 Quarterly - Rs.3,000 Bi-annually - Rs.6,000 Annually - Rs.12,000||No limit subject to underwriting approval|
This whole life plan from SBI Life caters to those between the ages of 18 years and 50 years. Life cover extends up to the age of 100 years. This non-linked with profit endowment assurance plan is designed to give customers the benefits of income, savings and insurance.
The Max Life Whole Life Super Plan offers guaranteed financial protection up to the age of 100 years along with bonuses. Policyholders are entitled to maturity benefits, death benefits, terminal illness benefits and tax benefits.
This plan offers life cover up to the age of 100 years with a lump sum payout benefit at the end of the premium payment term. Additions and bonuses also help boost the savings under this plan. Customers have the option of Accidental Death Benefit as well.
This plan is a limited premium endowment plan which has the option to stretch the life cover up to the age of 100. Customers only have to pay premiums for the policy term minus 5 years. Guaranteed additions for the first five years and profit participation are some of the benefits of this plan.
A whole life insurance policy has a tenure that extends up to the age of 100 years. A whole life insurance policy works in a very simple manner.As long as the premiums are paid, the policy will be in force. The policy will set an amount of financial coverage aside for the life insured. Upon the death of the insured, the family or nominee will be entitled to the death benefit. If the person survives up to the age of 100, then the insured will receive a maturity benefit.
There are a number of whole life policies in the market. The major types of whole life plans have been listed below:
Ordinary whole life insurance
This is the normal whole life insurance policy that you can purchase for yourself. This type of policy is nothing but a contract signed between you and the insurance company. You will continue to pay premiums in order to keep the policy in force while the insurance company will continue to provide you coverage. In case of your death, the nominee appointed by you will receive a lump-sum amount called the death benefit. If you survive the policy term, you will receive a benefit called the maturity benefit. However, the premiums that you will pay will be slightly on the higher side as compared to say a term insurance plan. The reason being that this type of whole life insurance has level premiums through the tenure of the plan. The policy builds up a cash value through the term. Initially, the cost of the plan will be higher than the same sum assured of a term insurance plan.
Limited payment whole life insurance
Under this type of policy, you will be required to pay premiums for a limited period of time. For example, you will be required to only pay premiums for 20 years and get insurance cover for 25 years or even up to the age of 100. The advantage of availing this plan is that it allows you to pay your premiums during a time when you are still working and when you are in a better financial position to pay your premiums. Once you have paid your premiums for the period specified, you need not have to worry, as you will still continue to receive coverage from the insurance company even when you are not paying any premiums to the insurance company. This type of policy is suitable for those who may not have the financial capabilities towards the later part of their lives to pay the premiums. This type of plan allows you to enjoy the benefits of a whole life insurance plan even when you may not be financially adept towards the later part of your life to pay the premiums. The premium payments are generally higher on these plans as the premium payment is shorter.
This is a very special kind of whole life policy that you may come across. This type of whole life insurance policy might be suitable for you if you prefer to pay the premium once as a whole amount and continue to enjoy the benefits offered by the whole life insurance plan. Once the premium is paid, the policy will be in force till the life insured expires. Upon the death of the life insured, the beneficiary will receive the death benefit. These policies may also have maturity benefits upon attaining the age of 100 years.The advantage of this policy is that it relieves you the burden of paying premiums regularly and it can be helpful to you when paying premiums can become a financial burden for you towards the later part of your life.
Modified premium whole life insurance
During the initial stages of the policy, the premium will be lower on these plans. For example, you may purchase this type of plan and pay lower premiums for say five years. After that, you will be required to pay higher premiums for the remaining period the policy will be active. These plans accumulate a moderate cash-value component that can be accessed by the policyholder and is free of tax. This type of policy is suitable for you if you are starting out early in your career and do not have the financial capability to pay the higher premiums in the beginning. So, as you will pay lower premiums for the first few years, you will also grow from a financial point of view and will be in a better position to pay the higher premiums towards the later part of your career.
Survivorship life insurance
This type of policy insures two people, usually spouses. Upon the death of the second life insured, the policy will pay out to the beneficiary. This policy is designed to insure both lives and pay benefits only after both have passed on. These policies are generally less expensive than two separate life insurance policies.
You should choose a whole life insurance policy under the following circumstances:
Lifetime Protection - The coverage of the policy will end only when the life insured passes on. This kind of life insurance keeps premiums steady through the entire policy. The policy will not be cancelled upon the diagnosis of any illness or other health issues. The only requirement is that premiums must be paid up as and when required.
Stable Premiums - Taking a whole life policy at a young age can lock in a low premium rate for the entire term.
Cash Value - These policies accumulate a cash value through the course of the policy. The cash value can be used to reduce future premiums, or it can be withdrawn. Loans may also be available against the cash value of the policy.
Flexibility - Whole life insurance plans allow the policyholder to use the cash value or retain it in the policy to grow the value of the plan even further.
Option to avail loan - There are whole life insurance policies which also offer you the option of availing loan against it.
Tax benefits- You can avail exemptions on your taxes for the premiums paid under Section 80C of the Income Tax Act, 1961. In case something happens to you, the beneficiary will receive a lump-sum amount called the death benefit which is also exempted from being taxed under Section 10(10D) of the Income Tax Act, 1961.
All insurance companies require individuals to meet certain criteria in order to be eligible for a whole life insurance plan. The general requirements have been listed below, however, this will differ between insurers.
Riders provide additional cover for an extra premium. These riders provide different benefits depending on the selection made by the life insured.
Accidental death benefit rider
In case the life insured dies in an accident, this rider pays an additional benefit to the nominee.
Disability income rider
If the life insured becomes totally and permanently disabled, this additional protection will provide a regular income to supplement the loss of income.
Level term rider
For a specified period, this rider will add a fixed amount of term insurance to the whole life policy.
Living benefits rider or accelerated death benefit
Upon the diagnosis of a terminal illness, this rider will pay a portion of the death benefit during the insured’s lifetime. This rider can be added on after buying the policy.
Long term care (LTC) rider
If you fulfil certain criteria specified by the rider, this additional cover will pay for expenses related to Long Term Care.
Policy purchase option
This rider gives you a right by contract to buy additional insurance without evidence of insurability. In case you have a child after you purchase the policy, you will be able to increase your life coverage later on.
Waiver of premium rider
In the event that you become unemployed or disabled and are unable to pay future premiums, this rider will ensure the policy remains in force and the rest of the premiums will be waived off.
There is a vast difference between term insurance and whole life insurance. While term insurance provides coverage only for a specified period of time, whole life insurance provides coverage for the entire lifetime of the insured person.
|Particulars||Term Insurance||Whole Life Insurance|
|Purpose||Pure life insurance||Insurance plus savings and investment|
|Understanding||Simple to understand||More comprehensive|
|Cost of Premium||Low premiums||High premiums|
|Renewability||Renewable||No need to renew|
|Increase in Premiums||Premiums can change||Premiums remain stable|
|Tenure||Fixed Term||Whole Life|
|Lapse||If the policy is not renewed, all benefits will cease||Benefits do not lapse as long as premiums are paid|
A. A whole life insurance policy provides life coverage to the policyholder for his/her entire lifetime. Thus, if you are looking for a life insurance policy that will provide you extended coverage, it is best to opt for a whole life insurance plan.
A. Some of the main benefits of whole life insurance plans are:
A. Life insurance providers usually decide the premium rate based on several factors such as the sum assured opted for, age of the policy buyer, riders opted for, etc. Thus, your premium payable will be linked to these factors. However, since whole life insurance plans provide extended coverage to the policyholder and also acquire a cash value, it is likely that they will be more expensive than certain other types of life insurance products.
A. Many insurance providers offer a number of life insurance policies online through their official websites. You can also choose to purchase life insurance plans through trusted third-party insurance websites. However, before you purchase any policy online, make sure to read through the policy brochure, check the premium quote, and compare the terms and conditions of at least a few different policies.
A. Selecting the right insurance provider is as important as selecting the right insurance policy. Here are certain things that you should look for when choosing an insurance provider:
A. When comparing insurance policies, make sure to keep the following points in mind:
A. No, usually for a whole life plan, the premiums will remain the same throughout the tenure of the plan.
A. This depends on the insurance provider. But usually, yes, you will be able to nominate more than one person to receive the benefits payable.
A. Yes, many insurance providers offer the facility to convert a term plan to a whole life plan. You will have to pay a higher premium if you convert the plan.
A. Generally, yes, this is allowed. When you surrender your policy, you will receive the cash value or a portion of the cash value. Any outstanding loan amount and other charges may be deducted from the cash value.
A. Churning is when a life insurance representative coaxes you into surrendering your whole life insurance plan for its cash value and then taking a new insurance policy. This is usually done to gain a new sales commission from the fresh policy. Customers should be wary of this practice.
A. The eligibility criteria for a particular policy will vary based on the terms and conditions of the policy. While most whole life insurance plans provide coverage to individuals over 18 years of age, certain plans also offer coverage to children as young as 30 days.
A. Most whole life insurance plans are limited premium payment plans, wherein policyholders will only have to pay the due premiums for a certain number of policy years. The life cover, however, will be provided for the policyholder’s entire lifetime.
A. An insurance policy that hasn’t acquired a surrender value yet will lapse if a policyholder doesn’t pay the due premium within the grace period offered by the insurer. If the policy has acquired a surrender value, it will be converted into a paid-up policy if the due premium is not paid by the end of the grace period.
A. Most insurance companies allow customers to avail loans against whole life insurance plans if the policy has already acquired a surrender value. However, in most cases, only a certain percentage of the surrender value can be taken as the loan amount.
You can purchase a joint or a group insurance policy which will cover more than one person. However, it is advisable to take advice of a financial consultant before deciding whether you need such type of an insurance policy.
There are various websites on the internet today which can help you compare the prices and the premiums you will be required to pay for the policies you might be interested in. You also will be able to check the features and benefits offered by these policies which in the end will help you narrow down your choices and in the end, help you purchase a policy which will be the most suitable for you.
It is always recommended that you purchase your whole life insurance policy from a trusted and reputed insurance company. One of the ways to check if the insurance company is suitable for you is to check their claim settlement ratio. Higher the claim settlement ratio, better the insurance company is likely to be. Apart from that, check their track record in how they deal with their customers’ grievances and the time taken by them to solve them.
Recently, with banking services being made available at India Post, rural people can now open a savings account, and can also make use of the India Post Payments Bank to make digital transactions. The move by India Post aligns with the Government’s aim to bring financial services to all and that’s exactly what they are achieving. In addition, rural people can also avail life insurance policies at affordable premiums. Initiated in 1995, the affordable premiums and services available are tailor made to suit those from rural areas and underprivileged backgrounds. For individuals and families, the life insurance products on offer by India Post are Endowment Assurance (Gram Santosh), Whole Life Assurance (Gram Suraksha), Convertible Whole Life Assurance (Gram Suvidha), 10 Years RPLI (Gram Priya), Anticipated Endowment Assurance (Gram Sumangal) and the Children Policy (Bal Jeevan Bima). All those between the age of 18 years - 60 years can avail the life insurance policies. The Whole Life Insurance policy with a minimum coverage of Rs.10,000 can be availed by just paying a premium of Rs.14 per month or Rs.148 per year, the endowment assurance policy which comes with a minimum coverage of Rs.10,000 is offered at a premium of just Rs.18 per month.
23 May 2018