Whole Life Insurance Plans

What Is A Whole Life Policy?

Whole Life Insurance Plans are insurance plans which provide cover to you for the rest of your life provided you pay the premium on time. You receive maturity benefit in case you survive the policy term. The nominee appointed by you receives the death benefit in case of your death.

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.

Best Whole Life Plans in India 2023:

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:

SBI Life - Shubh Nivesh:

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.

Max Life Whole Life Super:

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.

IDBI Federal Lifesurance Whole Life Savings Insurance Plan:

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.

HDFC Life Sampoorn Samridhi Plus - Whole Life Insurance:

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.

How does it Work?

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.

Types of Whole Life Policy:

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.

Who Should Opt For Whole Life Insurance?

You should choose a whole life insurance policy under the following circumstances:

• You have dependents that you wish to financially protect in your absence.
• You can afford to pay higher premiums.
• You would rather have a policy in force for your whole life rather than make renewals every now and then.
• You wish to accumulate a cash value which is sort of a savings through your insurance plan.
• You are a high networth individual who needs to make investments to curb taxes.
• If you have long-term goals to achieve then it is advisable that you purchase a whole life insurance. Whole life insurance plans will provide you a cover during this period of time and in case something happens to you, the financial liabilities arising out of your long-term goals can be taken care of.
• Whole life insurance plans may also offer you the avenue to build a corpus keeping in mind your future needs.

Benefits of Whole Life Policy:

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.

Eligibility Criteria for Whole Life Policy:

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.

• You should be at at least 18 years of age. There are some plans that are available to infants of 30 days as well.
• You should not exceed the age of 60 years upon entry into the plan.
• The maximum age upon maturity is 100 years.
• The minimum sum assured is around Rs.50,000.
• You can pay the premium either in a single premium, for a limited period or for the tenure of the policy.
• Premiums are payable annually, bi-annually, quarterly or monthly.
• Minimum premiums can be as low as Rs.500 per month.

Whole Life Policy Riders:

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.

Difference between Term Insurance and Whole Life Insurance:

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.