Whole Life Policy
A Whole Life Policy is a form of insurance that provides coverage for as long as premiums are paid over a lifetime.
3 key features of Whole Life Policy
Lifetime coverage
The most obvious benefit of whole life insurance is that it offers practically lifelong coverage. Most whole life insurance policies will either cover you for the rest of your life, or up to a ripe old age like 99 or 100.
Consistent premiums throughout
Whole Life Policy ensures that the premium stays the same throughout the payment period, eliminating the risk of a premium hike.
Usually investment-linked
One of the key features of a Whole Life Policy is that it also helps you accumulate cash value over the years. Thus, people think of whole life insurance policies as a hybrid insurance-investment product.
Lifetime coverage
The most obvious benefit of whole life insurance is that it offers practically lifelong coverage. Most whole life insurance policies will either cover you for the rest of your life, or up to a ripe old age like 99 or 100.
Consistent premiums throughout
Whole Life Policy ensures that the premium stays the same throughout the payment period, eliminating the risk of a premium hike.
Usually investment-linked
One of the key features of a Whole Life Policy is that it also helps you accumulate cash value over the years. Thus, people think of whole life insurance policies as a hybrid insurance-investment product.
What are the differences between Term Life Policy and Whole Life Policy?
The following table illustrates the similarities and differences between the Term Life Policy and Whole Life Policy.
| Term Life Policy | Whole Life Policy | |
|---|---|---|
| What is the purpose? | Protection against illness or accidents | Protection + potential to grow savings |
| What is the coverage? | Most plans cover death and total permanent disability (TPD). Option to add on Riders (i.e. Critical Illness Rider) | Most plans cover death and total permanent disability (TPD). Option to add on Riders (i.e. Critical Illness Rider) |
| What is the coverage period? | Up to a specific period (e.g. 5 years) or up to a specific age (varies across insurers but typically covers till 65 or older) | Usually up to end of life |
| How long do you have to pay for it? | Throughout the coverage period | Limited payment periods of 10, 15, 20 or 25 years |
| What are the surrender terms and benefits? | Coverage ends + no payout | Cash value (guaranteed + non-guaranteed bonuses if any) |
| Which policy type is more affordable? | More affordable than Whole Life but no surrender cash value | More expensive than Term Life as it provides some cash value amount which you can borrow/withdraw against |
| What are the death benefits? | Sum assured (if occurred within coverage period) | Sum assured + accumulated bonuses if any |
Top benefits of having a Whole Life Policy
- It offers practically a lifelong coverage
- Helps you accumulate cash value over the years.
- Most plans cover death and Total Permanent Disability (TPD)
Make sure you also read about the Term Life policy. Click the link below!
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