Whole Life Insurance
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Definition
A whole life insurance policy is a traditional life cover that provides insurance protection for the insured’s whole life until the premium is paid. Generally, the maturity age of the policy lasts till the policyholder attains an age of 100 years. Whole life insurance policy guarantees to be in force for the entire lifespan of the life insured.
Description
Getting life protection cover for the maximum time up until you live can be exciting. An insurance policy is the easiest alternative when you have life protection, savings, tax benefit, etc in mind.
There are policies that provide life cover up to age 100 years but not all of them offer a savings component. This is why whole life insurance policies became popular. Whole life insurance is a policy that provides cover till the time you pay the premium. The policy continues till the time you are alive with the maximum maturity age 100 years. If the insured dies before 100 years of age, the nominee gets a predetermined amount by the insurance company.
A whole life insurance policy helps the insured earn a cash value when the premium payment term is over. Apart from the life protection and bonus, the whole life insurance policy provides a borrowing option against the policy’s surrender time. If the insured outlives the policy term, the policy becomes a matured endowment policy. The death benefit earned under the policy is tax-free.
Other names of whole life insurance policy: Straight life policy, Ordinary life policy.
Example
Ramit is the sole breadwinner of his family. His old parents, his wife and two kids depend on him financially. He knows that if anything unfortunate happens to him and his income stops then the family members will not be able to cope with it. So to be prepared for the worst, he purchased a whole life insurance policy with a coverage amount of ₹2 Cr. The whole life policy covered him till 99 years of age. So, if Ramit passes away before age 99 the insurance company will pay the death benefit to the nominee of his family in case of a successful claim.
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