Before you start browsing through various life insurance plans available online, it is important to analyse and evaluate whether or not you actually need life insurance.
There are a plethora of factors that need to be considered, the most important one being if you are the sole breadwinner of your family and if your death will leave your dependents in a financial lurch. If this is the case, you should definitely invest in life insurance.
After all, investing in life insurance is a secure way to protect your loved ones financially as you get guaranteed return in the form of sum assured.
While planning to buy life insurance, you may choose between term life insurance and whole life insurance. The regular term insurance plans are pure life protection plans that pay a predetermined amount i.e. the sum assured to the dependents on the sudden death of the policyholder.
The term or the time period of regular term plans can be 5, 10, 20 or even longer. On the other hand, whole life insurance offers you death benefit regardless of the age at which the policyholder dies. The policy lasts for your whole life and the dependents are paid the total sum assured as a lump sum amount or as monthly installments, depending upon the payout option opted by the policyholder.
Regular term insurance is referred to as a pure protection plan where the insurer provides the nominee with the financial coverage in case of an untimely demise of the policyholder. The only constraint is the limitation of policy period which is up to 70 to 80 years and no payout is given if the policyholder outlives the policy period.
Whereas in whole life insurance, the coverage is extended until the lifetime of the policyholder. Whole life insurance is a good choice for those who wish to get insured for their entire lifetime. Once the policy goes into effect, the insurance company provides guaranteed death benefit to your dependents, no matter when you die. Individuals looking for long term protection plan must go for whole life term plans which are designed for those who wish to build an estate for their legal heirs.
Need for a Whole Life Policy
Till not a long time back, people generally used to work till the age of 55 to 60 years and post that they used to retire. For people who preferred to work until 60, regular term plan was a perfect alternative to protect their family from any unforeseen financial crises in case of their sudden death. However, things have now changed drastically as a large percentage of Indians now prefer working at least 15 years beyond the age of 60. This is where the concept of Whole Life Term Plan comes into play. Being a safe protection plan offering a guaranteed payout, the plans not only work as a legacy plan wherein an individual can leave behind the sum assured as a legacy for loved ones. Apart from this, it also provides with a lot of other benefits as it is a highly appealing policy because the degree of certainty is significantly high.
Cover for life
The insured is covered for his entire lifetime or say 100+ years. This means that it offers risk coverage for the entire life and there is no date of expiry of your policy. Regardless of when you die, your beneficiaries are sure to receive the total sum assured.
Tax Benefits
One can gain tax benefits after investing in the whole life insurance policy. Under section 80C of Income Tax Act, 1961, the premium paid towards life insurance policy helps in the exemption of tax up to 1.5 lakh per annum. Along with the income tax benefit, the payout given to the beneficiary is also tax-free under section 10(10D) of Income Tax Act, 1961.
The following is the comparative table of 5 leading insurance companies providing whole life insurance of INR 1Cr for 30-year-old male nonsmoker living in a metro city
| Company | Plan Name | Maximum Coverage (Years) | Total Payout | Premium (Annually) |
| ICICI Prudential Life Insurance | iProtect Smart | 99 yrs | 1 Crore | 28,176 |
| HDFC Life | Life Long protection option | 99 yrs | 1 Crore | 44,344 |
| AEGON Life | iTerm | 100 yrs | 1 Crore | 14,778 |
| TATA AIA Life | SampoornaRaksha | 100 yrs | 1 Crore | 15,458 |
| PNB MetLife | Mera Term plan | 99 yrs | 1 Crore | 15,812 |
(Views expressed in this article are a personal opinion of Santosh Agarwal, Chief Business Officer- Life Insurance, Policybazaar.com.)
