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Whole Life Insurance is the type of life insurance that provides coverage throughout the lifetime of the insured. The policyholder can fix the coverage at the time of purchase of the policy. Whole life policy stays in force as long as the premium is paid by the insured. There are various types of Whole Life plans available for potential buyers to choose from.

Before we dive into the details of Whole Life Policy and decide on the type of plan best suitable for you, let us be familiar with some of the major components of a Whole Life Policy.

Key Features of The Plan

benefits of whole life insuranceThere are several unique features of Whole Life Plans, which makes it very sought-after for those who consider life insurance to be indispensable and an essential tool for investment.

Listed below are some of the key features of a Whole Life Plan.

Protection For Life

Whole life plans are designed to hand over the sum assured plus accumulated bonuses (if any) to the heirs of the policyholder upon the death of the policyholder. Maturity benefits together with bonuses are also offered at the expiry of the tenure of premium payment.

Fixed Premium

The policyholder is required to pay a prefixed amount as premium every month. Unlike general life insurance, the premium amount in whole life plans is not liable to vary.

Loan Against Whole Life Plans

The policyholder can apply for a loan against his/her whole life insurance plan after the completion of 3 years from the start of the policy. The policyholder can borrow against the policy surrender value, which is a better alternative to borrowing against PPFs and EPFs.

Death Benefits

Whole life plans offer a death benefit to the beneficiary in the event of the death of the policyholder. The death benefit consists of sum assured and additional bonuses up to the day of death of the policyholder.

Tax Benefits

The policyholder is eligible for an income tax deduction for premium paid towards the policy under Section 80C of the Income Tax Act, 1961. The payout received by the policyholder/ nominee is also exempted from tax under Section 10(10D) of Income Tax Act, 1961.

How Does Whole Life Insurance Plans Work?

Whole life plans are ideal for those who would like to avoid the hassle of renewing their plan at regular intervals. The payment against whole life plans can be purchased by paying a single premium, or at a monthly or yearly basis.

The plan comes with a death benefit, maturity and survival benefits along with myriad additional bonuses. The plan extends life sum assured to the policyholder throughout his/her life up to the age of 100 years. In case the policyholder lives beyond the age of 100 years, the policy will become matured endowment.

The policyholder is entitled to receive maturity benefits at the maturity of the policy, which is the sum assured plus accumulated bonuses. Some whole life plans also offer survival benefits at regular intervals during the lifetime of the policyholder.

Types of Whole Life Plans

Whole life insurance plans may be classified broadly into two different categories. One may evaluate the plans under these categories to take a pick on the plan, which suits his/her insurance requirements.

1. Non-Participating Whole Life Insurance

Non-participating whole life insurance plan is a relatively low-cost insurance plan that extends coverage throughout the life of the insured. Non-participating plans feature face amount and level premium. Under this policy, the insured is not eligible to receive any dividends.

2. Participating Whole Life Insurance 

Unlike the non-participating whole life insurance plan, under this type of whole life insurance, you are eligible to receive bonuses. The premium paid for the plan is invested by the insurance company. The profit made through such investments minus the cost expense is distributed as a bonus to the policyholder.

Classified under participating and non-participating whole life insurance plans, there are a plethora of plans for the customers to choose from. Listed below are some of the major categories of whole life policies.

3. Level Premium Whole Life Insurance

Under this type of whole life insurance plan, the premium paid by the policyholder remains constant throughout the policy tenure. The policyholder must pay regular premiums until he/she is alive.

4. Limited Payment Whole Life Insurance

As the name suggests, the policyholder has to pay a premium for the prefixed duration of time, say 10 years, 20 years and so on. Owing to the limitation in the tenure of premium payment, the amount of premium is higher under this type of whole life insurance plan. The coverage remains the same i.e. whole life or till the age of 100 years.

5. Single Premium Whole Life Insurance

Under the single premium whole life insurance plan, the policyholder is required to pay a lump sum amount as a guarantee to the nominee. One of the biggest advantages of a single premium insurance plan is that the corpus quickly builds up therefore, adding up to a large benefit in the event of the unfortunate death of the policyholder.

6. Indeterminate Premium

Under this whole life insurance, the policy is subjected to two premium rates- the maximum guarantee rate and a lower rate. Initially, the lower premium rate is charged by the insurer following which a new premium rate is determined after taking into consideration factors like expense experience, actual mortality and interest. The insurer charges the maximum guarantee rate after a given period of time.

Best Whole Life Insurance Plans

Whole Life Insurance Plans are some of the most popular tools for investment, insurance and tax saving. There are a plethora of whole life insurance plans, which offers the best value for your investments.

Here are some of the top whole life insurance plans available at your disposal to choose from.

1. SBI Life Shubh Nivesh

The SBI Life Shubh Nivesh is an endowment plan that comes with full-life coverage. It is a non-linked profit plan that helps you save for the future steadily and receive maturity benefits at the end of the policy tenure.

 Eligibility (varies as per plan options)

Minimum Age 

Maximum Age 

18 years 

Regular Premium Plan: 55 years 

Single Premium Plan: 60 years 

Endowment with whole life option: 50 years 

 

Benefits

  • The plan comes with a minimum sum assured of Rs. 75,000 (x Rs. 1,000). 
  • The policyholder is eligible to receive a terminal bonus and regular simple reversionary bonus. 
  • The death benefit is the basic sum assured, plus terminal bonus and vested simple reversionary bonus.
  • The minimum premium for the plan starts at Rs. 6,000/year. 

2. Max Life Whole Life Super Plan

Under the Max Life Whole Life Super Plan, the policyholder will be extended life coverage up to 100 years, after the completion of which he/she is eligible to get the sum assured along with bonus additions.

Eligibility (varies as per plan options)

Minimum Age 

Maximum Age 

18 years 

60 years 

 

Benefits

  • On the completion of the policy tenure, the insured will be paid the guaranteed sum assured along with bonuses.
  • The insured will also be eligible to receive the guaranteed sum assured along with bonuses as death benefits.
  • The policyholder is paid 50% of the sum assured immediately in case he/she is diagnosed with a terminal illness. 

3. HDFC Life Sampoorn Samridhi Plus

Under the HDFC Life Sampoorn Samridhi Plus, the policyholder must choose between an endowment plan and an endowment whole life plan. While the endowment plan will pay off a lump sum amount at the end of the policy tenure, the endowment whole life benefits will be payable if the policyholder survives till the age of 100 years.

Eligibility

Minimum Age

Maximum Age 

30 days 

60 years

 

Benefits

  • 22% of the premiums are invested towards equity, which contributes to participating bonuses. 
  • Limited premium payment term is 5 years less than the policy term. 
  • Policy term can be anything between 15 years to 40 years. 
  • Additional protection offered by HDFC Life Critical Illness Plus Rider. 
  • Additional sum assured is offered in the event of accidental death of the policyholder.

It is always wise to compare the cost of the plan with insurance benefits before homing in on a particular insurance plan. In doing so, not only do you make better purchase decisions, but you also get the best value for money. 

Naval Goel is the founder of PolicyX.com. He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.
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