A whole life Insurance is a Term Insurance Policy that covers you for 99 years. They are different from ordinary insurance policies which have a defined term of say 10, 20 or 30 years.

Difference between Term Insurance and Whole Life Insurance

Choose Term Insurance If

Choose Whole Life Insurance If

You have financial dependents for a limited time period. For example, kids who will eventually grow up and become financially independent. You have financial dependents for a relatively long time period, possibly for your entire life. For example, children with special needs or a dependent spouse.
Your ability to pay life insurance premiums is relatively limited You want to leave a tax free inheritance for your children in addition to your existing assets. Alternatively, you have designated existing assets for one heir but also want to provide for another heir.

Benefits of Buying Whole Life Insurance

Whole Life Cover - The policy covers you for 99 years. This protects your family for an extended period of time. Many people have financial dependents even in their old age, and such a policy can take care of their financial dependents.

Level Premium - Your premiums remain fixed for the entire term of the policy, allowing you to benefit from an amount that will become lighter on your wallet over time. You also have certainty about the premium amount and hence can plan your expenditure accordingly.

Tax#- The insurance premiums are tax-deductible upto ₹ 1.5 lakh under Section 80C and the maturity amount is exempt from tax under Section 10(10)(D).

Whole life Insurance eligibility chart

These conditions differ from one insurance company to another. However, the following eligibility conditions are there for ICICI Pru iProtect Smart.

1. Minimum Age of Entry 18
2. Maximum Age of Entry 65
3. Maturity of the policy At the age of 99
4. Minimum policy premium `2400 p.a.

Premium payment options available in ICICI Pru iProtect Smart Whole Life Cover

The premium payment term of a whole life policy can be limited or regular. A limited payment period, involves premiums for a specific term of 10 years or 60 years less age at entry but the policy still covers you for your entire life. A regular payment term involves having to pay premiums for the entire duration of the policy. The type of payment term you should opt for depends on your preferences and regularity of income.

Additional Riders and Features available in ICICI Pru iProtect Smart

Riders are optional benefits that may be attached to a whole life policy. These will differ from one provider to the next. The following riders & features are commonly found in whole life policies:

  1. Accidental Death Benefit+:

    This rider pays out an additional amount if the policy holder’s death during the policy term is caused by an accident. For example if the life insurance cover is `1 crore and accidental death benefit cover is `25 lakh, then an accidental death benefit rider will pay out an additional `25 lakh if the death is caused by an accident.

  2. Critical Illness Benefit^:

    This rider pays out on the diagnosis of a critical illness such as heart attack, kidney failure or cancer. It helps you fight the illness and pay the expenses incurred in medical treatment. For example, if you have a critical illness cover of ₹30 lakh and are diagnosed with cancer, you will be paid `30 lakh, immediately on diagnosis.

  3. Terminal Illness Benefit:

    This rider pays out on the diagnosis of a terminal illness. A terminal illness, as distinguished from a critical illness is one which most likely lead to death. If you have a term insurance cover of ₹ 50 lakh, this amount will be paid to you on the diagnosis of a terminal illness.

  4. Permanent Disability Benefit:

    This type of rider can waive future premiums if the policyholder suffers from a permanent disability. The insurance cover is kept intact but future premiums do not need to be paid. For example, say you pay `10,000 per annum as premiums and you have a life cover of `50 lakh. You suffer from a permanent disability. All your future premiums of `10,000 will be waived but your life cover of `50 lakh will be kept intact.

  5. Lumpsum or Income Payment:

    Some policies will allow you to choose between income payment or lump sum payment to your nominees from the policy. On the death of the policyholder, his or her family may not want a large lump sum but instead, need an income to pay their monthly bills. This feature of payout options will give them this flexibility. For example, assume the policyholder has a life cover of `1 crore, but has opted to receive the same as income. On his death, the family of the policyholder will receive income of say, `10 lakh per annum in equal monthly instalments for 10 years rather than a lump sum payout of `1 crore. This income will be tax-free under Section 10(10)(D)#.

FAQs

1. Is whole life insurance a good retirement investment?

Will your spouse, children, a disabled relative, or parents depend on you financially after your retirement? If yes, then whole life insurance should be a part of your retirement plan. The payouts can sustain their old age needs and medical costs. In your absence, it can also help repay any loan that remains in your retired years. Thus, along with dedicated pension plans, you need to invest in whole life term insurance for your family’s all-round financial security.

2. Should I buy whole life insurance for my child?

Life insurance provides financial protection to a breadwinner’s dependents against eventualities. Whole life insurance provides payouts to your nominee when an unwanted event occurs. Thus, you need to consider if your child will need financial support even when you reach an advanced age. If they do, then you can buy a whole life term insurance policy with your child as the nominee.

3. Is whole life insurance costly?

Many people compare the cost of whole life insurance with other policies and make a decision based on premiums alone. However, they fail to take into account this hidden benefit of whole life insurance - its ability to help you create an inheritance for your family at an affordable cost.

4. How much coverage should I opt for while buying Whole Life Insurance?

You need to assess the amount that will cover your family’s living costs and future expenses before selecting your life cover. You should consider your family’s household spends and your unpaid loans, if any, to ensure your loved ones face no financial burden. Also, you need to factor in inflation. Financial experts recommend opting for a life cover equal to 10-12 times your annual income1. You can also use a human life value calculator to estimate the adequate amount.

5. Can whole life insurance help you create a legacy?

Yes, whole life insurance can help you leave behind a legacy/inheritance for your family. This is because the whole life policies cover you till the age of 99. If the insured person dies before this age, the beneficiaries of his life insurance policy will get the sum assured. Insurance payouts are also exempt from tax under Section 10(10)(D)#
COMP/DOC/Feb/2021/182/5354

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Disclaimers

# Tax benefits of Rs. 54,600/-(Rs. 46,800 u/s 80C & Rs. 7,800 u/s 80D) is calculated at highest tax slab rate of 31.20%(including cess excluding surcharge as per old tax regime)on life insurance premium u/s 80C of Rs. 1,50,000/- and health premium u/s 80D of Rs. 25,000/-. Tax benefits subject to conditions under Sections 80C, 80D,10(10D), 115BAC and other provisions of the Income Tax Act,1961. Goods and Services Tax and Cesses, if any will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.

+ Accidental Death benefit is upto 2 Crore. Accidental Death Benefit is available in Life Plus and All in One option. Accidental Death Benefit is only applicable upto age of 80

^ The critical illness benefit is an accelerated benefit and the death benefit will be reduced by the critical illness cover paid to the policyholder. The future premiums payable for the residual CI Benefit will reduce proportionately. In case the CI Benefit is equal to the Death Benefit, the policy will terminate on payment of the CI Benefit. Only a doctor’s certificate confirming diagnosis needs to be submitted. On payment of Angioplasty, if the CI Benefit is more than ₹ 5,00,000/- the policy will continue for other CIs with CI Benefit reduced by Angioplasty payout. Critical Illness benefit is available till age of 75. To know more about the illnesses covered, please refer to the Sales brochure. Available under Life and Health and All in One option

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ADVT No: W/II/3251/2018-19