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Whole Life Insurance: Compare & Buy Whole Life Insurance Plans Online

Updated On May 05, 2021

A whole life insurance policy is a type of life insurance policy that provides insurance coverage to the policyholder for the whole life, i.e. up to 100 years of age, for which the policyholder is required to pay the required premium on time. Covering you for as long as you survive, a whole life insurance policy offers guaranteed death benefit in case of unfortunate demise of the policyholder within the policy term. The sum insured amount can be decided by the insurance policyholder at the time of policy purchase. Also, note that the death benefit under the policy is tax free. 

How Does Whole Life Insurance Work?

The working of whole life insurance policies are different from other types of life insurance plans. Therefore, to decide whether you should opt for these plans or not, it is important to understand their working. 

Whole life insurance plans provide death benefit along with maturity and survival benefit to the policyholder, and can be purchased by paying a one-off sum on monthly, or a yearly basis, known as premium. Out of this, a part is used to provide protection and the remaining part remains invested with the company.

In case a profit is earned, then the policyholder shall receive a bonus on that amount. The value of the investment increases, and is returned to the policyholder when he/she chooses to withdraw, or survives till the maturity of the policy. In short, it is a good option to include whole life insurance plans in your investment portfolio.

Types of Whole Life Insurance Policies

There are different types of whole-life insurance policies, which the policyholder can purchase as per their own requirement. These are:

1. Non-Participating Whole Life Insurance

Non-participating whole life insurance policy is a low cost life insurance policy that comes with the features of face amount and level premium. As it is  a non-participating policy, so it doesn't pay you any dividend. Also, it does not have any bonus facility.  

2. Participating whole life insurance policy

This type of whole life policy pays dividends, but there is no guarantee that the policyholders will receive the same. But if paid, then it will be in cash,that can be used to reduce the premium or to remain invested and fetch interest. The dividend payment here indicates excess earnings that the insurance company has accumulated through investments, favorable mortality of the organisation, and savings from expenses. 

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Under these two broad categories, of whole life insurance policies, the individuals can choose form the following types of policies:

  • Level premium whole life insurance: It features level premium payments that shall be paid till the insured is alive. The premiums paid initially are enough to pay for the insurance protection costs. 
  • Limited payment whole life insurance: Here, the policyholder is required to pay the premium regularly for the entire policy term. 
  • Single premium whole life insurance: In this type of insurance, the entire policy premium is paid in one go. A large sum assured amount is paid here as a guaranteed payment to the beneficiary of the policy. 
  • Intermediate premium whole life insurance: Similar to ordinary whole life insurance, an intermediate premium whole life insurance policy allows the policyholders to adjust the premiums. On the basis of estimate of the current earnings, the cost of expenses and mortality, the insurer will charge the policyholders the ‘current’ premium. 

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Whole life insurance policies offer you several benefits, some of which include cover for life, assurance of coverage, periodic payments and tax benefits, they serve as a source of cash, you get a loan option on your whole life insurance policy, as well as benefits to your dependants. A whole life insurance policy is recommended as it offers a permanent life insurance policy. 

Also, you can also choose several riders with your whole life insurance policy, for which you must contact your insurance provider.   

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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