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What is Whole Life Insurance and How Does it Work?

By Finserv MARKETS - Aug 13,2019
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Benefits Of A Whole Life Insurance With A ULIP Plan

Though life insurance in general terms can be divided into term insurance and whole life insurance, in India we are lucky to have a combination of these products that gives us the best of both worlds. Apart from term insurance plans and whole life insurance plan, we have endowment plans, money back insurance plans, retirement plans, child plans and ULIP plans.

What is a whole life insurance plan?

A plan, also known as permanent life insurance, provides life coverage to the policyholder during his entire life until death or up to the age of 99-100 years. Upon death of the insured during the policy term, the nominee receives the sum assured, which is decided while purchasing the policy. If the insured is fortunate enough to live more than 100 years or survive the policy term, the insurance company pays the maturity amount to the policyholder.

One of the best ways to get the maximum out of whole life coverage is to combine it with the benefits of ULIP plans. A unit linked insurance plan with whole life coverage gives you protection for your entire life while helping you accumulate substantial wealth by investing judiciously in a wide variety of funds.

In fact, Bajaj Allianz Long Life Goal is one of the best unit linked insurance plans that come with whole life cover. With this plan, you can pay premium for a limited term ranging between 10-25 years and get continued coverage up to 99 years. Further, it comes with a return enhancer feature whereby each instalment of the retired life income is increased by 0.5% over and above the level chosen by you.

Types of whole life insurance plans

The objective of a whole life insurance plan is to provide long-term protection to the family of the insured, as well as accumulate a substantial sum as maturity or survival benefit if the insured survives. Whole life insurance can be a traditional insurance plan which works more like an endowment plan while the other type offers the benefits of ULIP plans.

Benefits of whole life insurance

  • Long-term coverage:

With life expectancy in India growing and the government even mulling to increase the retirement age to 70 years, a whole life insurance plan makes sense because it gives us lifelong coverage up to 99-100 years.

  • Constant premium:

The premiums that you pay for whole life coverage remain constant during the policy term. It’s easier for you to save for the premium and budget accordingly.

  • Death benefit with accrued bonus:

In the unfortunate death of the insured, if all premiums have been paid regularly up to the time of death, the nominee will receive the sum assured as well as the accrued bonus.

  • Tax benefits:

Premiums paid towards a whole life insurance policy is eligible for tax deductions under section 80C and the money received by the nominee is tax-free under section 10(10D) of the Income Tax Act, 1961.

  • Loan option and surrender value:

Unlike a term insurance plan, you can use a whole life insurance plan to borrow a loan in case of financial need. As the surrender value of the policy increases, you can get larger amounts of loan at very low interest rates.

  • Works as an insurance, retirement and investment plan:

It not only provides whole life coverage but also works as a retirement corpus. In case, you don’t survive the policy term, your spouse can benefit from the death benefit amount. Moreover, the investment quotient of whole life insurance is exponentially increased if bought as a ULIP.

Finding the best ULIP plan with whole life cover

A whole life insurance plan combines the benefits of unit linked insurance plans and whole life insurance. A Unit linked insurance plan is an insurance product that allows the flexibility of investing in various funds – equity, debt and balanced – depending upon investment goals, horizon and risk appetite. The best unit linked insurance plan with whole life cover bridges the gap between lifelong life coverage, investments and retirement planning. In fact, it combines all three and places a powerful financial tool in the hands of the investor.

Similarly, Bajaj Allianz Long Life Goal available on Finserv MARKETS comes with very useful features such as partial withdrawals, waiver of premium, loyalty additions and periodical return of mortality charges. You are assured of best ULIP returns with plans available on our platform. You can expect returns as high as 25% over a 5-year investment period – the reason why it enjoys healthy ratings from Morning Star, the world’s leading investment rating agency.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522