Whole Life Policies For Dummies: Are They A Good Way To Insure Your Family

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There are a number of life insurance products that prospective life insurance buyers can choose from. Some of the most common types of life insurance policies include term insurance plans, whole life insurance plans, endowment plans, ULIPs, money-back plans, and annuity plans, among others.

While certain life insurance products like term insurance plans offer life coverage to the policy buyer for a specific duration that usually ranges between 5 years and 40 years, whole life insurance policies offer a risk cover against death to the policy buyer for a duration of 99/100 years or their entire lifetime. Read on to know more about whole life insurance policies and whether you should purchase this type of a policy.

Who Should Purchase a Whole Life Insurance Policy?

Given that a whole life insurance policy provides coverage for the policyholder’s entire lifetime, this type of a policy is best suited to individuals who would like to receive coverage for an extended duration of time. For many people, their liabilities and financial commitments don’t end when they retire. In such cases, it is wise to opt for a whole life insurance policy since this will ensure that the life assured’s nominee is provided a compensation if something happens to the former party, at any point during the policy tenure. This policy is also a good choice for individuals who wish to leave a legacy behind for their dependents.

Features of Whole Life Insurance Policies

Some of the key features of whole life insurance policies are as follows:

• Coverage for 99 Years: As mentioned above, whole life insurance policies offer coverage to the life assured for his/her entire life or for a period of 99 years, as per the terms and conditions of the policy.
• Death Benefit: During the course of the policy tenure, if the life assured happens to pass away, a guaranteed death benefit will be provided to the nominee assigned by the policyholder.
• Maturity Benefit: Most whole life insurance policies also offer returns to the life assured. These policies may either pay out the returns upon the individual attaining a certain pre-specified age or upon the individual attaining the age of 99 years/100 years, based on whichever is the maturity age specified in the policy document.
• Premium Payment Term: Most whole life insurance policies are limited premium payment policies, i.e. the policyholder will only have to pay the due premiums for a limited number of years. However, he/she can continue to avail the coverage provided for the entire policy tenure.
• Riders: Many life insurance companies give policy buyers the option of customising and enhancing the coverage of the base policy by purchasing additional riders.

Benefits of Purchasing a Whole Life Insurance Policy

A few important benefits of whole life insurance policies are as follows:

• Purchasing a whole life insurance policy will give you peace of mind since you know that your dependents will be provided a compensation if anything happens to you at any time.
• A whole life insurance policy can help you leave a significant inheritance for your dependents.
• Policyholders can avail tax benefits upon purchasing a whole life insurance policy.
• The premium payable remains constant throughout the policy tenure.
• Many whole life insurance plans also serve as an investment/savings instrument, thus providing the policyholder returns.
• Given that most whole life insurance policies acquire a cash value, it is possible for the policyholder to surrender the policy or avail a loan against the policy.

Things to Keep in Mind When Purchasing a Whole Life Insurance Plan

While a whole life insurance policy does offer extended coverage to the life assured, it is also important to remember that it is also more expensive than certain other types of life insurance products like term insurance plans. Thus, if you are considering purchasing a whole life insurance policy, it is important to first assess your premium payment ability.

It is also necessary to consider your coverage needs. If you only require life insurance coverage during your employment years, you should go with an insurance product that has a shorter policy term.

If you do decide that a whole life insurance plan is what is best suited to your requirements, make sure to check the various whole life insurance plans that are offered by different insurance companies and opt for a policy that provides you adequate benefits at an affordable premium rate.