Whole Life Insurance
What is Whole Life Insurance?
As the name suggests, a whole life insurance plan offers financial security and insurance coverage for the rest of your life. This type of insurance protects you and your loved ones by providing you with a life cover! for up to 99 years. This can safeguard the financial interests of your family in your absence.
How Does Whole Life Insurance Work?
Whole life insurance policies remain active from the day of purchase until the policyholder reaches the age of 99 years. The plan offers death benefit in case of an unfortunate event during the policy tenure, securing the financial security of your loved ones.
The life insured pays a fixed premium to the insurance company throughout the term. Whole life insurance policy coverage continues as long as all premium payments are made in full and on time. The coverage is discontinued upon the completion of the policy term i.e., when the policyholder turns 99.
COMP/DOC/May/2024/155/6112
Types of Whole Life Insurance Policies
Whole life insurance can be categorised into the following types:
Limited Payment Whole Life Insurance
If you select limited payment whole life insurance, you need to pay the policy premium for a limited period during the policy term. In most cases, you can pay the premium for the first 10 or 20 years and continue to enjoy policy coverage for a lifetime. The premium may be relatively high for these plans as you have a limited period to pay the premium but the overall savings on premiums would be higher than a regular payment life insurance plan.
Single Premium Whole Life Insurance Policies
If you select single premium whole life insurance, you pay the premium in a lump sum as a one-time payment at the time of purchase. Moreover, your coverage remains constant for the entire policy term and the nominee enjoys uninterrupted financial protection.
Modified Whole Life Insurance
If you select modified whole life insurance, you pay varying amounts at different intervals of the policy term. In most cases, the premium is relatively low at the beginning of the tenure and gradually increases with time. However, irrespective of the premium amount, your policy coverage and benefits stay the same for the whole term.
Variable Whole Life Insurance
A variable whole life insurance policy offers life cover for the entire policy term, protecting your loved ones against any financial contingencies in your absence. Additionally, it also helps you meet your investment goals by investing your money. You can invest in this plan to enjoy tax benefits, build savings, and ensure financial protection for your loved ones.
Joint Whole Life Insurance
A joint whole life term insurance covers two people instead of one. The premium is paid for both policy owners, and the sum assured is offered for both lives. The insurance payout is given on a first-death basis. These types of plans are suitable for couples planning to save for the financial needs of their children in their absence.
Difference between Term Insurance and Whole Life Insurance
Choose Term Insurance if |
Choose Whole Life Insurance if |
|---|---|
| You have financial dependents who would stay dependent for a limited time period. For example, kids who will eventually grow up and become financially independent. | You have financial dependents who would stay dependent on you 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 paid are eligible for deductions of up to ₹ 1.5 lakh under Section 80C and the maturity amount is exempt from tax# subject to 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 years |
| 2. | Maximum Age of Entry | 65 years |
| 3. | Maturity of the policy | At the age of 99 |
| 4. | Minimum policy premium | ₹ 2400 |
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 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.
2. Critical Illness Benefit^- This rider pays out on the diagnosis of 34 Specified critical illnesses 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.
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 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.
4. Permanent Disability Benefit- This type of rider can waive future premiums if the policyholder suffers from 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. 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# subject to Section 10(10)(D)#.
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 expenses 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).#
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 expenses 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).#
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