Salient Features of Whole Life Insurance Policy
As mentioned at the beginning of this note, whole life insurance provides coverage to the policyholder until 100 years of age, subject to payment of premium as per scheduled dates. The policy provides protection to the insured until death.
Coverage for Whole Life
The whole life insurance plan guarantees coverage for the life of the insured while also ensuring the financial security for the family/loved ones in the absence of the breadwinner of the family following his/her demise.
At the juncture of policy maturity, the insured receives a lump-sum payment as maturity benefit along with the applicable bonuses. Moreover, some of the whole life insurance plans also offers maturity benefit in form of regular income from the end of the premium payment term till the policy matures. Thus, at the time of maturity of the policy, the insured can opt for availing the maturity benefit as a one time payment or receive it as regular income on a periodic basis.
Financial Support for the Dependents
Whole life insurance policy is a great investment option to provide financial security to the family in case of an unfortunate demise of the primary insured. When an individual opts for the whole life plan, then both the spouse will remain covered and in case of the demise of one of the partner, the policy will provide sum assured as death benefit to the beneficiary of the policy. Further, the policy of the spouse works as a financial backup for the children after the demise of the insured person. This ensures financial stability for the family and ensures they continue to retain the existing lifestyle.
Offers Loan Facility
As whole life insurance provides protection up to 100 years of age, in case of any urgent need for cash, the policyholder can opt for loan facility against the plan. However, the loan can only be availed after 3 policy years and if all the premiums of the policy are fully paid on time. The surrender value of the policy increases over time and you can borrow against the policy’s surrender value at any time.
The insured can avail tax exemption under section 80C on the premium paid towards whole life insurance policy. Moreover, the maturity claims are also tax exempted under section 10(10D) of ITA 1961.