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Should You Invest In A Whole Life Term Plan?

dateKnowledge Centre Team dateMarch 09, 2021 views211 Views
Should You Invest In A Whole Life Term Plan?

If you want to invest in an instrument which will preserve your wealth for generations, and you want to start small, whole life term plan is perfect for you. However, are there only these two reasons to invest in a whole life plan? Definitely not.

The online whole life term plan from life insurers like Canara HSBC Life Insurance offers few incredible features. These features make this plan a lot more versatile than a simple whole life plan in the traditional sense.

What is Whole Life Term Plan?

A whole life term plan is a term insurance plan with 99 years of coverage. Meaning, you can continue the term life cover till the age of 99 years. A whole life term plan is also a lot cheaper than the traditional whole life cover which is an endowment plan.

Whole life term plan and whole life plan both offer long-term life cover including cover in your post-retirement period. You can use these plans to meet multiple financial needs and life goals for your family.

Reasons to Invest in Whole Life Plan

Whole life term plans have certain features which no other life insurance plan can offer. Some of the most important benefits of investing in a whole life plan are:

Terminal Illness Cover Post Retirement

The term plan from Canara HSBC Life Insurance offers insurance cover for dreaded diseases as a default feature with the life cover. Thus, so long as your life cover continues you also have a defined benefit cover available against diseases like cancer, heart failure and others.

While in your working years being diagnosed with one of these diseases can be devastating emotionally and financially, post-retirement diagnosis is no different.

Under normal term cover, your critical cover also expires with the policy, typically around retirement. However, post-retirement your family only has your retirement funds to provide for the treatment expenses. Spending your retirement or pension funds on treatments of such diseases could leave your spouse in distress financially.

Thus, having a term cover with terminal illness benefit in your kitty is a great help, especially post-retirement.

Return of Premium at Retirement

If you choose the option of premium return at the expiry of the premium payment term for the whole life cover, you can have additional cash in your hand. Return of premium option gives you two distinct advantages as your policy progresses:

  • The policy has better cash value, and you can use it to borrow money in emergencies without breaking the policy
  • You have additional cash at the time of retirement which you can use for building your pension or investing in other needs

If additional liquidity at retirement is a desirable goal for you, make sure to select the correct plan option to include this benefit.

A Legacy for the Next Generation

Although, you may transfer your wealth and assets to the next generation after your retirement. But often it’s not possible to pass-on the gifts directly to your grandchildren. Whole life insurance enables you to transfer the benefit amount directly to your grandchildren after your demise.

Whole life insurance is a perfect tool for you to ensure this wealth gift.

Large Term Cover for the Earning Period

Whole life insurance has the longest coverage period for any life insurance policy. The whole life term insurance, thus, plays a dual role. In your earning years, the policy covers your family with a large sum assured, as a perfect alternative to a standard term insurance cover.

For example, you can buy a Rs. 1 crore term cover at the age of 30 for a premium of about Rs. 2300. This cover will continue till you reach 99 years of age. The entire benefit amount will be available to your family in case anything happens to you before the retirement.

Thus, you can give adequate financial protection to your family while investing in the legacy for the next generation.

Whole Life Term Plan from Canara HSBC Life

Whole life term plan from Canara HSBC Life Insurance, iSelect Smart360 Term Plan, gives you the option to choose either a whole life cover or whole life term cover. The major differences and similarities between the two plans are:

Whole Life Cover “Life Plus” cover option Whole Life Term Cover “Life” cover option
You can select a normal policy term, i.e., until retirement Select a policy term till the age of 99 years
Premium payment term and policy term remain the same for an optimal premium amount Most optimal premium is available for premium payment term of until retirement (60 years of age)
Insurer returns all the premiums paid till the policy term if you survive No option of premium return
After the return of premiums, the policy continues to cover you without additional premiums The policy continues to cover you for the intended term, i.e., till you attain the 99 years of age
If you survive till the age of 99, you receive the benefit amount (policy sum assured) If you survive till the age of 99, you receive the benefit amount (policy sum assured)
Offers better cash value within the policy term (before retirement) The best cash value is achieved after retirement The best cash value is achieved after retirement

Thus, you can select the plan based on your financial goals about safety, liquidity and legacy for your progenies. Other benefits such as tax savings, the tax-exempt status of maturity proceeds and other benefits received from the policy remain the same.

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