Everything about a whole life term insurance policy

While you adult through your late 20’s, you have many things to worry about. Your work, education, buying a house, settling down, and much more. But at this time you don’t ever think about your retirement. But it is crucial to take that into the consideration right from the start.

With retirement comes insurance. But it is never advisable to plan for insurance when you’re about to reach your retirement age. It is advisable to be prepared years in advance. ‘NOW’ is the best time to get a life insurance policy.

But when it comes to life insurance, there are so many options available. Which is the best one? Term life insurance or Endowment policy or ULIPs or whole life policy?

While you might opt for a term insurance plan, the downside to a term plan is that there is not enough period to protect you for your entire life. At most times, the policyholders outlive the term of the insurance plans and they lose all their premium. In such times, you can avail whole life insurance.

What is a Whole life insurance plan?

Whole life insurance is a term life insurance plan that covers you for 99 years. The coverage lasts until your 100th birthday. Moreover, there are guaranteed payouts to dependents of the insured. It is also called permanent insurance. The policy remains in force till the time you pay its premium. There is a guaranteed cash value for a whole life insurance plan. It is a fixed amount that you receive when you cease to make payment for the premiums. In the case of a whole life insurance plan, the cancellation of your policy returns you the cash value.

Would you want to opt for Whole life instead of Term life insurance?

You need not make a choice right from the start. Instead, you can convert your term life insurance to a whole life insurance plan. It means you can extend your term insurance cover for more than its duration. The time before which you can opt for such a conversion depends on each insurance company.

Who should opt for a whole life term insurance?

In cases where you have dependents for your entire life, whole life policy helps to leave a tax free inheritance for your dependents. This might be helpful in cases where parents opt for a whole life insurance plan for their kids with special needs or a dependent spouse too.

What are the benefits accrued under a whole life insurance cover?

• The most important benefit is coverage for the longest period. This offers peace of mind knowing there is a financial safety net for your dependents after you are gone.
• The premiums are fixed for the entire life. This helps in planning your expenses to meet your insurance commitments. Also, as time value of money decreases, the premiums will become lighter on your wallet eventually.
• There are tax exemptions for payment of premiums under section 80C as well as for the maturity amount under section 10(10)(D) of the Income Tax Act,1961.

To make your whole life plan a much more comprehensive insurance cover, you can add additional riders which are optional benefits.

Some common add-on that will offer complete protection to you are as follows-

• Accidental Disability Add-On protects you and your family in case of disabilities as well as accidents that make it difficult to resume a normal livelihood.
• Critical Illness Add-On offers an insurance cover from severe ailments that can disrupt the normal living conditions.

While it is all that you need to know when you buy term insurance for your whole life, you can make use of a term plan calculator that can help in estimating your premiums. Make the best choice by selecting the right insurer for you and your family.