Facts To Know About Whole Life Insurance

A Whole Life Insurance is a type of life insurance policy that is aimed at providing life insurance protection for up to 100 years. This life insurance policy remains valid throughout life, provided that all the life insurance premiums are paid on time. Unlike most other life insurance types, a whole life insurance plan provides longer insurance coverage and several other benefits. While the maturity age for whole life insurance plans is 100 years and if the policyholder outlives this tenure, then the policy becomes matured endowment maturity benefit is offered thereof. So, let us understand the facts to know about whole life insurance. 

How is the Premium Paid for Whole Life Insurance?

Whole life insurance provides coverage for the entire life and thus it is alternatively also called the Permanent Life Insurance Policy. In order to keep your whole life insurance plan active, you need to pay the premium only for 10-15 years, followed by which your plan will remain active for your entire life. For instance, if you have purchased whole life insurance at the age of 40 years, then you need to pay premium only till 55 years of age. It is important to understand that the premium is paid only for a limited period of time, so the premium paid is generally high. Anyone who is interested in investing in a whole life insurance plan can do so by comparing the different plans offered by life insurance companies and accordingly picking a preferred insurer. 

Facts Associated with Buying Whole Life Insurance

Listed below are the facts associated with buying whole life insurance plans:

• As the name suggests, a whole life insurance plan provides protection for a lifetime. It provides guaranteed benefits to the policyholder and their beneficiaries.
• With a life insurance plan, you can also create a corpus. A part of the premium paid towards whole life insurance is kept for life insurance and the remaining is there for creating an investment corpus. 
• The nominee of whole life insurance can get a death benefit in case of the untimely death of the policyholder and the maturity benefit is paid out to the policyholder if he/she outlives the policy term.
• Another benefit of a whole life insurance plan is that the premium paid towards it is for a limited period, followed by which the policy will remain active.
• There are tax benefits offered under whole life insurance plans as per sections 80C and 80D of the Income Tax Act, 1961.
• Policyholders can even use whole life insurance plans as loan collaterals and use them for getting loans. 
• A whole life insurance plan is a great tool for future planning and helps to create a corpus for the future. 
• You can add different riders such as premium waiver rider, accidental death benefit rider, critical illness rider, and more to enhance the benefits offered under your Whole Life Insurance Plan. 

Types of Whole Life Insurance Plans

There are different types of whole life insurance plans such as the following:

• Non-participating Whole Life Insurance Plan: A non-participating whole life insurance plan does not provide any bonuses or dividends.
• Participating Whole Life Insurance Plan: A Participating Whole Life Insurance Plan on the other hand provides the benefit of bonuses. The premium paid for this plan is also invested by the insurer and later paid out to the policyholder.
• Pure Whole Life Insurance Plan: For a Pure Whole Life Insurance plan, the premium is paid throughout the tenure of the policy.
• Limited Payment Whole Life Insurance Plan: Limited Payment Whole Life Insurance plan policyholders are required to pay the same amount of premium for the whole tenure.
• Single Premium Whole Life Insurance: In a Single Premium Whole Life Insurance plan, the entire premium is paid in one go. 

Take Away

Thus, a whole life insurance plan is extremely beneficial in getting lifetime protection as well as maturity benefits. Along with everything else, a whole life insurance plan also offers tax benefits.

Also read: Loan against Endowment plans