Life Insurance Whole Life plans

Whole life insurance plans are life insurance plans which provides insurance coverage to the policyholder for the whole life i.e. up to 100 years of age. Also known as whole of life assurance, sometimes called "straight life" or "ordinary life," this is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. As a life insurance policy it represents a contract between the insured and insurer that as long as the contract terms are met, the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to remain in force as long as the required premiums are paid, the premiums are typically much higher than those of term life insurance where the premium is fixed only for a limited term. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid up in 10 years, 20 years, or at age 65.
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The policyholder at any time withdraw the policy or borrow against it. The maturity age for this policy is 100 years. If the insured lives past the maturity age, the policy will become matured endowment. The death benefit under this plan is tax free. Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies. A whole life insurance plan offers guaranteed death benefit to the beneficiary of the policy in the event of unfortunate demise of the policyholder during the tenure of the policy. The insurance holder can decide the sum assured amount at the time of policy purchase.

How do they Work in the Indian Life Insurance Market?

Whole life insurance is a customised life insurance plan which provides coverage to the insured for their whole life to ensure they can live a financially stable life while providing Maturity and Survival benefits along with Death benefit. Hence there will be a pay out at any cost to the insurance company.

Out of the premium paid to the insurance company, a smaller part is utilised as premium for providing life protection for the insured and the remaining stays invested in the company over the lifetime of the policy. If a profit is earned by the insurer, the insured is entitled to get the bonus on the invested amount. If however there is a loss in investment due to various factors, the sum insured is reduced proportionately. Thus the investment corpus grows in value over time along with the insured and is returned to the policyholder if he chooses to withdraw or lives till the maturity of the plan. Some whole life policies also give customers the option of obtaining cover against specific illnesses or disability.

Who Should Opt for Whole Life Insurance Policy?

Whole life Insurance plans are ideal for every individual, especially those in the prime of their life and have many years ahead to look forward to. Ideally this is most suited to:

  • Individuals who want to create a financial corpus for the future for their peaceful retirement, and family members following their untimely demise.
  • This plan is also an ideal tax saving option for individuals in the higher tax brackets.
  • This is the perfect opportunity of investment for individuals looking for a stable yet significant return on their investment while simultaneously enjoying the benefit of life coverage.

Salient Features of Whole Life Insurance Policy

As mentioned at the beginning of this note, whole life insurance provides coverage to the policyholder until 100 years of age, subject to payment of premium as per scheduled dates. The policy provides protection to the insured until death.

Coverage for Whole Life
The whole life insurance plan guarantees coverage for the life of the insured while also ensuring the financial security for the family/loved ones in the absence of the breadwinner of the family following his/her demise.

Periodic Payments
At the juncture of policy maturity, the insured receives a lump-sum payment as maturity benefit along with the applicable bonuses. Moreover, some of the whole life insurance plans also offers maturity benefit in form of regular income from the end of the premium payment term till the policy matures. Thus, at the time of maturity of the policy, the insured can opt for availing the maturity benefit as a one time payment or receive it as regular income on a periodic basis.

Financial Support for the Dependents
Whole life insurance policy is a great investment option to provide financial security to the family in case of an unfortunate demise of the primary insured. When an individual opts for the whole life plan, then both the spouse will remain covered and in case of the demise of one of the partner, the policy will provide sum assured as death benefit to the beneficiary of the policy. Further, the policy of the spouse works as a financial backup for the children after the demise of the insured person. This ensures financial stability for the family and ensures they continue to retain the existing lifestyle.

Offers Loan Facility
As whole life insurance provides protection up to 100 years of age, in case of any urgent need for cash, the policyholder can opt for loan facility against the plan. However, the loan can only be availed after 3 policy years and if all the premiums of the policy are fully paid on time. The surrender value of the policy increases over time and you can borrow against the policy’s surrender value at any time.

Tax Benefits
The insured can avail tax exemption under section 80C on the premium paid towards whole life insurance policy. Moreover, the maturity claims are also tax exempted under section 10(10D) of ITA 1961.

Types of Whole Life Insurance Plans

A whole life insurance policy is a life insurance policy which protects the insured against death, irrespective of when it occurs. Since there is no fixed term under whole life insurance, most policies are to run until the insured is 100 years of age and are ideal retirement solutions. The most prominent whole life policies include:

Non-Participating Whole Life Insurance
This is a life insurance policy which offers allows the feature of face amount and premium payments are constant throughout the duration of the policy plan. The advantages of such a policy are its fixed costs and relatively low out-of-pocket premium payments As a non-participating policy, the plan does not pay any dividend and nor does it offer bonus facility.

Participating Whole Life Insurance
Participating life insurance plan offers the benefit of bonuses/dividends and this is its most important feature. Under this plan, the premium paid by the insured is invested by the company; excess earnings which the company earns from investments, savings from expenses and favourable mortality is paid as bonuses to the insured. There is no guarantee that policy holders will receive dividends/bonuses.

Limited Payment Whole Life Insurance
Under this plan option, the policyholders are required to pay the premium of the policy regularly for only a limited tenure of the plan and the premium remains constant for the payment period. Hence the insured pays a fixed number of premiums for a specific number of years or till he/she reaches a specific age while the coverage remains throughout the life of the insured. Hence premiums are relatively higher since tenure is restricted.

Single Premium Whole Life Insurance
Under this plan option, the entire premium of the policy is paid as a one time payment as a lump sum and coverage remains for the whole life of the insured.

Pure Whole Life Insurance
Under this option, the premiums are paid continuously throughout the life of the insured until death. Risk coverage is for the entire duration of life and the sum assured is paid after the death of the insured.

Life Insurance Whole Life insurance products

Key Features:
  • Max Life Whole Life Super insurance plan is a savings plan which helps the insured to systematically raise a corpus for the family over a period of time.
Key Features:
  • This is a Non-Linked Non-Participating Whole of Life Term Insurance Plan from Aegon Life which provides life cover for your entire lifetime of the insured and not just a certain period.
Key Features:
  • Cash Income- Retirement Plan an Endowment plan for retirementwhere an individual can pay premium for 20 years and get protection till age 100.
Key Features:
  • Tata AIA Life ensures that it offers you superlative investment avenues for all time to come.
Key Features:
  • Kotak Life Insurance's Premier Life Plan is a limited premium payment, participating whole life plan.

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Life Insurance Partners

  • Ageon
  • TATA AIA Logo
  • Exide Life
  • kotak
  • Max Lifw
  • Hdfc
  • Icici Prudential
  • IDBI Federal
  • India First
  • Edelweiss
  • Future Generali Insurance plans
  • bajaj Life
  • Pramerica Insurance plans
  • aditya birla sun life Insurance plans
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