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 up to ₹ 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:
- Accidental Death Benefit+:
This rider pays out an additional amount if the policyholder’s death during the policy term is caused by an accident. For example, if the life insurance cover is `1 crore and the accidental death benefit cover is `25 lakh, then an accidental death benefit rider will payout an additional `25 lakh if the death is caused by an accident.
- 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 the diagnosis.
- 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 leads 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.
- 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.
- Lump sum 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)#.