Fri, 29 Sep 2023

Life insurance is an important investment in today's times. It is also a great financial tool that will help provide financial security to your nominee(s) in unforeseen circumstances. A good financial advisor will advise you to opt for life insurance, which offers great tax-saving benefits.

While there are many types of life insurance in the market, most come with a limited life cover. It usually means that the nominee(s) get the payout only on the insurer's demise within the insurance period. On the other hand, Whole life insurance provides whole life cover with a maturity age until 100 years. It makes it one of the best life insurance policies in India to invest in.

What is whole life insurance?

Whole Life insurance, also termed as Permanent Life insurance, provides coverage until the insurer's death with the maturity of the cover of up to 100 years of age, in most cases. The insured is covered for the entire life if they keep the policy active by paying premiums. The nominee(s) receive the death claim at the sad demise of the insurer. However, in certain traditional whole-life plans, if the insurer outlives 100 years (policy term), the insurer will receive the sum assured amount. In case the critical illness benefit has been paid, the same is deducted from the sum assured paid. The said is subjected to the timely payment of premium throughout the term.

The dual benefits of whole life insurance make it a popular choice. Also, you can never predict when unforeseen circumstances may affect you. Therefore, choosing whole life insurance will ensure that your nominee(s) are financially stable, even after you.

What are the key features and benefits of a Whole life insurance policy?

1) Protection for life-

It is one of the important features of whole life insurance. Under this policy, the insurer is covered for life, with a maturity cover of up to 100 years. The nominee(s) will receive the entire assured amount after the insurer's demise.

2) Guaranteed payouts-

When you opt for specific traditional whole life insurance plans, your payout will be guaranteed as an endowment amount after survival of 100 years of age or as a death payout.

3) Premium Payment period-

A whole life insurance policy is an affordable choice for many. The term for paying premiums is up to the policyholder. You can opt to pay the premiums as a single lump sum amount or on a monthly, quarterly, half-yearly, or annual basis, or for a limited premium payment term depending on the terms and conditions of the policy,

4) Tax benefits-

According to the Income Tax (IT) Act of 1961, you will receive tax benefits under sections 80 (C) and 10 (10D). The premiums you pay towards your insurance policy are eligible for deduction of upto INR 1.5 lakh in a year under Section 80 of the Income Tax Act of 1961. And the payout you receive, as a death benefit or maturity benefit, is entirely exempt from tax under Section 10 (10D) of the income tax laws. The provisions of the Income Tax (IT) Act of 1961, as revised from time to time, apply to the aforementioned tax benefits.

5) Death benefits-

Like most life insurance policies, Whole life insurance comes with death benefits. In case of the insurer's death, the nominee(s) will receive the death payout and bonuses. However, it is essential to keep the policy active by keeping up with the premium payments.

6) Different payment options-

Most whole life insurance policies in India provide survival benefits and bonuses if applicable. Some insurers offer the bonuses you receive as a lump sum during your premium payment period. You also get the option to receive monthly payouts from the insured amount after the policy term is completed.

7) Avail loan on your whole life insurance policy-

Whole life insurance comes with the added benefit of being eligible for a loan. As your whole life insurance comes with lifetime coverage, you can opt for a loan against it. It is always a good option to borrow against your policy's surrender value, which keeps increasing with time.  It is a good option for Cash when in need. A portion of the whole life insurance premium payments builds up in a cash value account, which can be used for a policy loan, withdrawal, or surrender of the policy.

There are primarily two categories of whole life insurance policies:

Participating Whole Life Insurance has provisions to pay a bonus to the policyholders.

The bonus is given out of the profits the insurer receives from investing the premiums paid by the policyholder, as per the agreement.

Non-Participating Whole Life Insurance is an affordable plan with level premium and assured sum and offers no bonus.


Most life insurance policies in India come with limited life cover in which if the policyholder survives the policy tenure, the payout is canceled if the policy is not renewed. It is impossible to predict death, but with whole life insurance providing full life coverage until death, you can be free from worry not just about financial protection for your loved ones but also about all your premium payments being wasted.








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