Types of Whole Life Insurance Policy and Their Advantages

Do you wish to stay covered under an insurance policy that covers you for the entire life or up to 100 years? If so, get the coverage of Whole Life Insurance. Read on to know more about it in this post.

If you want a policy that offers lifelong coverage, consider the Whole life insurance plan. This plan covers the insured for his/her entire life or up to 100 years provided the person keeps paying the premium on time.  The plan allows the beneficiary to receive a guaranteed amount in the event of the demise of the policyholder during the policy tenure. The sum assured under this plan can be decided at the time of purchasing the policy. Further, if the insured outlives the duration of the term, which is 100 years, he/she is provided maturity benefit under matured endowment coverage. Under Whole Life Insurance, the policyholder needs to pay the premium for the first 10 to 15 years, while the coverage of life insurance is provided till the insured is alive.

Let’s take a whole life insurance example, if someone buys a whole life insurance policy at the age of 40 years, the person would make payment of the premium till the age of 55 years. However, the person will get life coverage for their entire lifetime. Since you need to pay the premium for a limited tenure of the policy, the premium amount of the whole life insurance tends to be high.

Types of Whole Life Insurance Plans

1. Non-participating whole life insurance – Under a non-participating plan you do not get any dividend or bonus benefit. Only death benefit is received by the nominee and the premium is low and fixed
2. Participating Whole Life Insurance –  Being a participating plan, it allow bonus and maturity along with life cover as death benefit
3. Pure Whole life insurance – As per this plan, you pay the premium for life until death. Here, the nominee receives the risk benefit along with sum assured after the demise of the insured
4. Limited Payment whole life insurance –  Here, the insured pays regular and constant premium till the tenure of the plan.
5. Single payment whole life insurance –  The payment of the entire premium is done in a single time under this plan. The plan allow the nominee to receive a large sum of death benefit

Functioning of the Whole Life Insurance Plans

The Whole life insurance policy is intended to cover the insured for the entire life and to make the person secured in terms of finances. This policy builds a financial cushion for the future to safeguard the insured against accidental deaths.  The policyholder also receives maturity benefits under this plan. Further, there are many options of whole life insurance coverage provided by different insurers that you can choose from.

The functioning of the whole life insurance is simple like other plans. Here, a part of the premium paid by the policyholder is used by the insurer for investment purposes, while the rest is used for protection. If the amount used as investment earns a profit, the insured receives a bonus on the investment. This investment, that grows over time, is returned to the policyholder at the time of maturity of the plan or if the policyholder withdraws from the plan.

Hence, with whole life insurance the policyholder can create a mass of wealth along with getting life coverage for entire life. Thus, it serves as a good investment plan to consider.

Whole Life Insurance Policy- Feature and Benefits

Below are some of the benefits of whole life insurance:

• The nominee of the insured gets guaranteed death benefit under whole life insurance plans (if the premiums are paid on time)
• Most policies allow the insured to pay a fixed premium for entire tenure without any fluctuation in the amount
• These policies allow lifetime protection to the insured with death benefit and bonus after the demise of the insured
• You can avail tax deduction on premium and maturity under section 80C and 10D respectively
• Loan benefit is also available after 3 years of policy completion

Best Whole Life Insurance Plans in India

Here are some top whole life insurance plans available in India:

Whole Life Insurance Plan	Entry Age (Min. & Max.)	Age of Maturity	Tenure of policy (in yrs)	Sum Assured
HDFC Life Sampoorna Samridhi Plus	30 yrs min.   60 yrs max.	75	15 to 40 yrs	Min. INR 65, 463   Max. No Limit
Max Life Whole Life Super	18 yrs min.   50 yrs max.	100	Up to 100 yrs	Min. INR 50,000   Max. No Limit
Reliance Life Long Savings	15 yrs min.   30 yrs max.	70	15 to 30 yrs	Min. INR 80, 000   Max. No Limit
SBI Life Shubh Nivesh	18 yrs min.   60 yrs max.	65	15 years (life cover till 100)	Min. INR 75, 000   Max. No Limit
TATA AIA Life Insurance Fortune Maxima	30 yrs min.   60 yrs max.	100	100 yrs (minus age at the time policy purchase)	1.5 times of single premium in case of single premium. Limited pay depends on policy terms and conditions
Aegon Life Guaranteed Income Plan	20 yrs min.   55 yrs max.	85	85 yrs (age of entry)	Min. INR 1,00,000   Max. No Limit
Star Union Daichi’s Jeevan Ashray	8 yrs min.   50 yrs max	70	15 to 25 yrs	Min. INR 2,00, 000   Max. 50,00,000
PNB Metlife Whole Life Wealth Plan	30 yrs min.   65 yrs max.	99	99 yrs (minus age at the time policy purchase)	Multiples of SI depending on age of entry

 

Difference between Term Insurance and Whole Life Insurance

Below are Term VS Whole Life Insurance points:

Whole Life Insurance Plan	Term Plan
It provides the double benefit of savings and investment.	Provides only death benefit
It allow flexible tenure and is up to 100 years	It allows fixed tenure
The premium paid is used as both protection and investment fund. Thus, the policyholder gets a share of bonus when a profit is made	It offers no such feature
The premium amount of whole life is more	The premium amount is low
Premium remains constant for the entire policy duration	It allows dynamic premium during policy premium
It allow maturity benefit if the insured outlives the plan along with death benefit	No maturity benefit offered here, only death benefit