Whole life insurance is a life insurance policy that provides death benefit coverage to the insured for the lifetime. A Whole life insurance policy assures a death benefit to the beneficiary in exchange of insurance premium payment. Whole life policies come with the longest tenure since the plan aims to stay with you till your natural death. The maximum age for the policyholder, in this case, can go up to 100 years. Now you also have the option of buying a whole life term insurance cover. The policy will cover you up to the age of 99, or your demise whichever is earlier. The whole life policy also includes a savings portion which is known as the “cash value insurance” which earn an interest rate.
There are different types of whole life insurance options available in the market. However, you must know the variety of whole life plans to make an informed and smart decision.
Participating and non-participating whole life plans are traditional whole life insurance plans. The only difference between both the plans is the cumulative bonus. While participating plans acquire a bonus from the company based on the company’s performance, non-participating plans do not consider the bonuses.
However, both policies will cover your whole life and have a level sum assured. You may find these plans with two further variations:
A whole life term plan is a life insurance plan which covers your life till the age of 99. A standard whole life term plan will have the following options:
In any case, the policy will continue till your demise, and if you survive till 99 years of age, the sum assured is paid to you.
This whole life plan also gives you the option to get all your premiums back at the expiry of the term. Under iSelect Star whole life term plan, you can get all your paid premiums back if you outlive the policy. This whole life policy provides not only the life cover but also reduces the cost of it to zero. Apart from that, you can still be sure of leaving an estate for your grandchildren.
Whole life insurance is a great way to leave a legacy while ensuring financial safety for your family throughout life. Whole life policies generally continue until you reach 100 years of age. Thus, making them benefit your family even in the case of natural death.
You need to select a mode of premium payment, i.e., monthly, quarterly or annually
The plan will pay Rs. 1 crore to your nominees in case you are diagnosed with a terminal illness covered under the plan or your demise.
The policy also covers natural death due to old age
If the policy is in force and all premiums have been paid for the policy, at the age of 60 the policy will return all the premiums
Any time before reaching 60 if you stop paying premiums and do not revive the policy within five years, your policy will acquire exit value
After the age of 60, your life and critical health covers continue without further premium payments
If your death occurs before the age of 99, the policy will pay the sum assured to your nominees. In case you contract a terminal illness before the age of 99, the policy will release the sum assured and will cease to exist.
If you survive till the age of 99 without a claim on the policy, the policy will pay the sum assured to you.
In exchange for these benefits, you are required to pay regular amounts known as ‘premium’.
A part of the whole life insurance policy premium goes towards the life cover while the remainder is invested towards your legacy. The policy will continue as long as you pay premiums. The whole life policy will benefit your family in the following two cases:
If your death occurs before the age of 99, your family will receive the sum assured as a death benefit. Sum assured will be given even if the death is due to natural causes.
After passing the age of 60, all the premiums will be returned to you. Also, if you survive till the age of 99, you will receive a survival benefit, i.e., sum assured.
These benefits ensure that your family remains financially protected even if you are not present.
Riders are additional benefits that improve the scope for a whole life policy. These offers to cover for situation that the base policy does not cover. The riders are optional in a whole life policy and you can add as per your needs. The various riders that you can add to your whole life policy are-
As the name suggests the future premiums for your whole life policy will be waived off if you meet with a covered condition. The conditions may include, accidental disabilities, critical illnesses like cancer, renal failure, etc.
The policy will continue with a premium waiver and offer the death benefit as originally intended.
Several diseases such as cancer, heart problem, kidney failure incur huge medical costs and can still be fatal. These diseases can result in loss of earnings as well while your expenses continue to mount.
Critical illness rider allows you to have a large sum paid to you upon diagnosis of any such illnesses. You can use the amount to receive better treatment and look after the living costs while you recover.
In plans such as Canara HSBC Oriental Bank of Commerce Life Insurance Company’s iSelect Star Term Plan, critical illness cover is a default cover with the policy.
Accidents can often lead to lengthy and taxing recovery and legal processes before the family can continue with their lives. Thus, the final expenses for the family increase in the case of accidental death.
Accidental death rider ensures your family can receive an additional sum with the base death benefit in the whole life policy. For example, if you have taken a policy having a sum assured of Rs 50 lakh and also the ADB rider of Rs 25 lakhs. Then on your death due to an accident, you will receive Rs 75 lakhs.
Major accidents can sometimes cause disability. Severe disabilities can hurt your normal earning prospects and bring financial hardships. The accidental disability rider provides you with a benefit amount in case you suffer from a disability from an accident.
Accidental disability rider benefit kicks in with the loss of 2 or more limbs in an accident. For example, loss of both hands, or eyesight in both eyes, etc.
Most whole life insurance plans will automatically offer a lump sum payment of death benefit. However, you can convert a part of it into a regular income with the income benefit rider.
This rider will make sure that your nominee receives part of the benefit from whole life insurance as a regular monthly income.
Whole life term policy covers you for a long period, including the time when you are over 60 years and retired. Thus, whole life insurance will make sense for you if:
You plan to leave a legacy for your children
You want your term cover to continue post-retirement
Lifetime cover against life-threatening diseases
Save tax under section 80C
Whole life insurance is a long-term investment plan that can help you throughout life. You can use a whole life policy better in the following situations:
When you are single, you do not have much responsibility, but as you grow up you would like to have a family. As your family grows your responsibilities grow too.
Thus, you need to make sure that your wife and children are protected even if something happens to you, thus whole life insurance becomes a must.
In whole life insurance, you get both insurance and investment. This policy’s premium is used towards both life cover and investment. Thus not only your life is secured, but your future is also preserved too.
Whole life insurance policies build a cash value over time. Also, you only have to pay premiums maximum till the age of 60. After 60, all the premiums are returned to you and the policy continues further. Thus it helps accumulate a corpus for your retirement.
Naturally, you would want your kids or grandkids to take over your possessions after you are gone. Since this policy continues till 99. It will pay a guaranteed sum assured on both deaths as well as maturity. The money you receive can be used to leave a legacy for your next generation.
At Canara HSBC Oriental Bank of Commerce Life Insurance you can buy the whole life plan online following a simple six-step process:
The process starts with your contact details and a few personal information such as your date of birth educational qualification and income. Your details give a clear idea about your maximum life cover eligibility.
After you have chosen the cover amount, you need to choose ‘till 99 years of age’ as the policy term for whole life cover.
You can also select a premium payment mode to see a tentative figure for the amount you will pay. If you are salaried you can select a monthly mode of premium payment and see the impact of term insurance cost on your budget.
You should pay special attention to the e-mail ID you provide here, as this will be used for all communications regarding the policy by the insurer. So, make sure that you regularly access the email you provide here.
The second step considers your location, occupation and existing coverage details. These details help determine your maximum cover eligibility.
Some of these factors like state of residence and occupation can influence your premium for the life cover.
Once you have decided on the amount and tenure of the cover, it’s time to choose your plan features.
You can select the following plan features:
Select Plan Options: Life or Life Plus Cover Options. After selecting these options, you can follow the table below to see your options under both plans:
|SELECT COVERAGE OPTION||Level: You can keep your life cover fixed throughout the policy
Increasing: Your life cover grows at a fixed rate of the base cover.
|Only Level option available|
|POLICY TERM||Select ‘Till 99 years of age’ for whole life coverage||Select any suitable policy term. You can keep the policy term up to the age of 60 (retirement age), or slightly later, as the policy will return all your premiums upon expiry of this term.|
|BENEFIT PAY-OUT OPTIONS||Lump Sum only: Entire sum assured is paid in one instalment||You can choose to pay the benefit sum as regular income or as a lump sum. You can also divide it between both.|
|PREMIUM PAYMENT TERM||Regular: Premiums will be distributed throughout the policy tenure.
Meaning, you will need to pay
the premiums until a claim or till 99 years of age.
Limited: You can choose a shorter premium payment term. Pay till 60 option best optimizes your premium outflow and term.
|Regular: Premium payment term is equal to the policy term
Limited: Choose any tenure less than the policy tenure
Under iSelect Star Term plan whole life cover options, you cannot add accidental and child support benefits as add-on covers. However, the critical health coverage is available to you by default along with the life cover.
Once you have decided on the benefits and premium amount of the whole life insurance cover, you can review your choices and benefit amounts. After reviewing your plan details you can complete the proposal form and pay the insurance premium.
You can use your credit or debit card, net banking, UPI or a Wallet account for online premium payment. Don’t forget to opt for auto-debit option, so that your policy can continue even if you forget about the premium payment later.
The proposal form contains more detailed questionnaire about personal, professional, lifestyle and medical history. Along with the proposal form you will need to submit supporting documents as well which will include the following (but not limited to):
After the insurer has accepted your premium and proposal form, based on the details provided, you may have to go through either of the following:
However, if you are eligible for the whole life cover without medical you can simply move to the next step.
If you need to undergo a medical check-up physically, you will be assigned a date and place for the insurer’s health check-up requirements. Health check-up is an important step as it ensures that your health status is understood by the insurer and there is no risk of an early demise.
In case, you have a health condition, occupation or hobbies which may increase the risk of your early death, the insurer may offer any of the following choices:
In case of increased premium cost, you can continue to get the cover by paying the balance amount of premium.
After the medical check-up and paying the balance premium after revision (if applicable) the insurer will dispatch the policy document to you. In the case of the online application, the policy documents are sent online to your registered e-mail ID.
You should check yours and your nominee’s personal details like name, contact number, date of birth and address on the documents. Ensure that these match the details on the legal documents so that you don’t face any challenges in managing the policy.
Backed by Canara Bank,
Punjab National Bank and HSBC
Assets Under Management as per 31st December 2020
In FY 2021-2022
Whole life insurance and term insurance are both life insurance policies. However, both plans offer specific benefits and have a lot of differences in features and benefits:
|Basis||Whole Life Insurance||Term Insurance Plan|
|Meaning||It is a type of life insurance product that provides you life cover for your whole life||It is a variant of life insurance that provides you life cover for a specific period or ‘term’|
|Duration||Up to 99 years||For a specific duration eg, 5 years, 10 years, etc|
|Maturity Benefit||Yes, Whole life Insurance provides maturity or survival benefit||No, the only death benefit is provided|
|Purpose||It acts as an insurance and an investment product||It only provides life insurance|
|Cash Value||Builds a cash value||No|
|Loan Facility||The loan can be taken against the policy||Loan facility not available|
|Premiums||Premiums do not change throughout the policy||Premiums can increase on renewal|
If you meet the following criteria you can apply for a whole life term cover:
You are between the age of 18 and 50 years
You have an income from employment, business, profession or investments
The purpose of a whole life policy is to provide a life cover for the financial protection of your family through your working life. The policy then doubles up as an estate plan after your retirement. Thus, whole life insurance is a great tool for wealth transfer. However, if you wish to accumulate wealth you should consider Invest 4G Plan or Guaranteed Savings Plan.
Both insurance plans serve a specific purpose in your life. Term insurance can provide adequate financial cover to your family as you work hard to build their future. Whole life cover serves a dual purpose of life cover as well as a wealth transfer tool. A whole life term insurance plan like iSelect Star combines the benefits of both plans to allow you to use a whole life plan as a term insurance cover in your working years and as a wealth transfer tool after your retirement.
The policy will pay the sum assured benefit amount to the policyholder.
Yes, you can do so after completing two years from commencement. Provided all the due premiums have been paid.
Whole life policy will acquire cash value or surrender value after two consecutive policy years. However, the cash value in the early years could be nominal. It increases as you pay more premiums, and later on, if you need you can borrow money against the policy based on this cash value.
Yes, whole life insurance is an investment asset which can help you transfer the wealth to your next generation.
Whole life insurance policies cover you up to the age of 99. Thus, this policy will continue well after your retirement. If you want to provide a fund pool to your child in the later years of your life, whole life insurance could be a choice.
You can add your child as a nominee so that they receive the sum assured after your death.
Your life cover umbrella is for your family’s long-term financial protection and should provide for the following:
- Outstanding loans
- Household expenses
- Education expenses
- Inflation rate
Usually, a life cover equal to 10-15 times your annual income is enough to take care of these. Whole life insurance plan is one of the life insurance plans to provide this coverage to your family.
You can have a whole insurance plan to provide the entire umbrella. However, building a folio of multiple plans like – term insurance, child plan and whole life plan will be more efficient and economic.
The maximum age to start your whole life insurance policy ranges from 60 to 65 for insurers. The minimum age to enter a whole life insurance contract is 18. Thus, you can buy a whole life plan anytime between 18 to 65 years of age, provided you have an income to pay the premiums.
The income would also justify the amount of cover you can buy.
On the face of it, the premiums that you pay towards your whole life insurance policies can be higher than other policies such as term insurance.
But unlike other policies, Whole life insurance covers you for up to the age of 99. This policy can act as an investment and also build a cash value. This policy also helps you if you want to leave an inheritance to your family members.
Thus, with increased premium, you are offered a wider range of features and benefits.
The sum assured (the amount you are covered for) decided at the time of buying the policy is the death benefit. It will be provided to your family after your death.
The death benefit is generally provided in a lump sum but can be received in instalments.
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