Advantages Of Whole Life Insurance Plans
There are various life insurance plans available in the market. In order to understand which plan is best for you, it is importantto understand the details of various life insurance plans available in the market.
Term Insurance -
Term plan is a pure risk plan, and covers the insured for a specified period. At the end of this period, the sum assured is payable to the policy holder. In case of an untimely death, the beneficiaries receive the amount specified in the policy.
Endowment Plan -
In this policy, the insurance company pays a pre-agreed amount as a lump sum after a specified period or on death. Typically these are unit linked policies.
Whole Life Plan -
As the name suggests, whole life insurance policiesprovide life insurance cover for the entire life of the insured and the sum assured is payable to the beneficiaryon death. The policy holder pays premium throughout his lifetime.
The two maintypes of whole life insurance plansare:
Traditional Whole Life Insurance Plan:The policy holder pays premium throughout his life time. Upon death, the insurance company pays the sum assured to the beneficiary.
Single Premium Whole Life Insurance Plan: In this plan, instead of yearly payments, the policy holder gets lifetime coverage by making one single lump sum payment.This policy is ideal for those who are uncertain about the consistency of their earnings and expect it to drop substantially over a period of time.
So why should you opt for a Whole Life Cover?
Following are the advantages of purchasing a whole life insurance policy:
1.Fixed Premium: Premium is fixed at the inception of the policy and it remains the same throughout the policy period (lifetime)
2.Maturity Benefit: Most insurance companies provide a maturity benefit in the form of a bonus when the policy holder reaches a particular age (generally 80 years)
3.Death Benefit: Upon death, the beneficiary will receive the sum assured plus all bonuses that have been declared under the policy
4.Tax Benefit: The premium paid and the maturity amount are eligible for tax deduction and exemption respectively
5.Additional Riders: There are also various riders such as accident disability, waiver of premium and critical illness which can be purchased with the policy.
Most insurance companies offer you the option to purchase insurance plans online. Having decided the type of life insurance policy you want to purchase, it is a good idea to compare various products of different insurance companies.
by: Sudeep Desai