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Top 5 Benefits of Whole Life Insurance that you Should Know Before Buying a Plan

Life Insurance

People have now understood the importance of maintaining excellent health and having adequate medical coverage in these pandemic situations. A normal life or health insurance policy could provide you with the essential benefits you expect, but you may need additional coverage for unforeseeable scenarios. Therefore, having a Whole Life Insurance is always beneficial to the policyholder as it provides risk cover for their entire life.

However, many people confuse the whole life insurance policy with a term life insurance and end up buying the wrong policy that doesn't fit their lifestyle and requirements. A term insurance policy will provide the insured member coverage for a designated period such as 10, 20, 30, or 40 years while a whole life insurance policy covers the policyholder for their entire lifetime. So, you must understand the full benefits of life insurance policies and compare various life plans before selecting the right one.

Top 5 Benefits of Whole Life Insurance Policy


1. Lifetime coverage

Unlike other life plans that are valid for a specific period, a whole life insurance policy can provide the insured member lifetime coverage. The other life insurance policies will expire after their designated period, and buying a new plan will prove to be very costly at that age (say 45 or 50).

The highlighting advantage of the whole life insurance plan is that the nominee can receive a lump sum tax-free amount from the insurance company in case something tragic happens to the policyholder.

If the insured member survives the premium plan's term, they can receive the lump sum payment at reel the completion of policy term, and use it for their retirement purposes or other financial liabilities. Also, the policyholder will still get their cover at the age of 100 or when they die, whichever is sooner.

2. Fixed premium costs

The insured member can receive lifetime coverage with an assured premium price for a limited payment term. The premium rate of any whole life insurance policy will be constant throughout the policy term, and the sum assured is also guaranteed.

The only varying factor in this plan is the bonuses and survival benefits based on the policy's performance and maturity. The whole life premium prices may seem higher initially but will become affordable over the long run.

3. Potential financial backup

The policyholder can take a loan or borrow money against the cash value of their life insurance policies after a certain point. It would prove helpful during a financial emergency or when the insured member has exhausted all their sources of income. However, loan can be availed only when all due premiums are paid.

In that case, the policyholder need not pay the loan back if they couldn't or chose not to, as the insurance policy will deduct the loan amount from the policy's death benefit sum. Alternatively, the insured member can repay the loan when they have the money for obtaining their desired death benefit payment.

4. Tax benefits

Having whole life insurance with living benefits will provide the policyholder significant tax benefits during the entire term of the insurance plan. The policyholder will leave a tax-free amount to the nominee in case of an eventuality, in addition, the insured member's cash value will also grow tax-deferred.

For instance, let's say that an insured member put that money in a regular, non-retirement investment account. In that case, the policyholder must pay taxes every year for their dividends and interests generated in the account, unlike life insurances, where most of their payment methods are generally not taxable. The saved money may prove useful during a financial emergency or cover the family's future financial goals. However, tax laws are subject to amendment.

5. Assured periodic payments

Many people may understand the full benefits of life insurance policies, but choosing the right type of life insurance might seem very challenging. The whole life policy will have a fixed premium rate and assured death benefit for the entire life of the insured.

The advantages of life insurance policies become apparent during unexpected and unfortunate moments. The whole life insurance with living benefits, on the other hand, offers dual benefits of life cover and additional bonus, promising the family financial security in case of any eventuality.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.