Whole Life Insurance

A whole life insurance is a comprehensive life insurance policy that offers the benefits of life cover as well as investment to policyholders. As a result, it can be used to protect one’s family in case of an unfortunate event, while also being used to build a corpus for retirement.

The life cover, referred to as sum assured, is a set amount that is paid to the policyholder in case of an unfortunate demise during the coverage period. Like other life insurance policies, a whole life insurance policy is designed to offer financial security to one’s family. To understand how whole life insurance policies offer a reliable safety net, let’s take a look at the example below.

Aarushi is 30 years old and has decided to purchase a whole life insurance policy. The sum assured offered to her is 40 Lakhs. Aarushi has purchased a Limited Premium Whole Life Insurance Policy (which is a type of whole life insurance policy further explained below). As a result, she must pay her premiums for 15 years (as per the policy’s predefined premium payment period), and can enjoy coverage for the rest of her life.

When a policyholder purchases a whole life insurance policy, he or she pays a premium every month or year (based on preference). A portion of the premium paid goes towards the sum assured, while the rest is invested. Based on the performance of the fund, the profit is given back to the policyholder if they either live until the maturity period, or choose to withdraw the amount. Some policies may provide a dividend to the investor and this can help with maintaining financial stability during retirement.

The specific workings of a whole insurance policy can vary based on the type of policy chosen, as explained below.

When picking a whole life insurance policy, it is important to determine one’s future requirements along with premium payment capacities. Whole life insurance policies vary based on the premium payment options, and these can have higher or lower premiums based on the payment period, bonuses, age of the policyholder and other factors.

Policyholders who are the sole breadwinners can benefit from participating whole life insurance due to features such as dividend payments. On the other hand, policyholders with ample investments can choose a non-participating whole life insurance policy for security.

While whole life insurance offers comprehensive coverage, there are certain exclusions that policyholders must keep in mind. These exclusions refer to situations that do not warrant a payout, and are deaths caused by:

• Suicide
• Involvement in illegal activities
• Alcohol or drug use
• Terrorism
• Lifestyle causes
• Life-threatening sports, like cliff jumping

To purchase a whole life insurance policy, you must provide the following documents:

• Identity proof (such as passport, Aadhar Card, Driver’s License)
• PAN Card
• Two passport size photographs
• Address proof (such as passport, Aadhar Card, Driver’s License)
• Age proof (such as class 10th marksheet, class 12th marksheet, passport, Aadhar Card)

To buy a whole life insurance policy online, policyholders can:

1. Visit the website of the desired insurance provider
2. Sign-up/Log-in to create/access their account
3. Select the desired policy. You can either sign the policy online or print the policy, sign it, and then scan it to save it on your computer system.
4. Submit the self-attested KYC documents along with a signed copy of the policy
5. Pay the first premium through netbanking, UPI, NEFT or RTGS payment modes, whichever is preferred.
6. Save the policy document received via email onto your desktop for future use.

To buy a whole life insurance policy offline, policyholders can:

1. Visit the office of the desired insurance provider or call an insurance agent from the company and schedule a meeting
2. Read all policy documents carefully and sign the policy
3. Submit the KYC documents along with premium amount
4. Keep the policy document in a safe area your family can always access

In order to a file a claim for your policy, you must:

1. Contact your insurance provider
2. Register your claim by visiting the insurance provider’s office/online/via email/via telephone
3. Accurately fill the claim form
4. Submit the relevant documents (death certificate, claim form, identity proof, address proof, original policy document, and any other document specified by your insurance provider)
5. Wait for the verification process to be completed

Once the verification process is over, the sum assured will be given to the nominee. It is important to note that as per IRDAI guidelines, insurance providers must release the payment within 30 days of the claim being filed.