Is whole life insurance a good investment?


What is a whole life insurance policy?

A whole life insurance policy stays active through your entire life provided you pay the premiums on time. It is a category of term insurance that pays you the benefit if you survive the term, and in case of your demise, the benefit will be passed on to the nominee. These term plans have a longer duration and go up to 99 years. If you outlive the maturity age of the policy, the benefit that you get will be known as matured endowment.

How does a whole life insurance policy work?

The working of a whole life insurance policy is very similar to that of a ULIP (Unit Linked Insurance Plan). The premium you pay towards this policy is paid either monthly, half-yearly, or annually. A part of the premium amount is used for protection, and the other part is invested in money market instruments.

What is the eligibility criteria for the whole life policy?

  • The applicant must be at least 18 years old.
  • The maximum age limit at the time of buying the policy should not be more than 60 years.
  • The sum assured amount has to be minimum Rupees 50,000.

Who should opt for such policies?

Anyone who is looking for an insurance product that offers the dual benefit of protection and investment can invest in a whole life insurance policy. You can consider investing in whole life policy if:

You want to build a retirement corpus

You are just starting your career and are looking for a long-term investment plan along with a financial protectoin against emergencies.

What are the benefits of such policies?

Life coverage – The insured gets coverage for life and at a much affordable premium.

Financial Benefits – The benefits of this policy keep increasing over time. The premium and sum assured remain static throughout the term, but the bonuses keep coming. However, the bonus depends on the type of fund you invest.

Cash reserve – It is not easy to keep liquid money, but a whole life insurance policy allows you to withdraw cash.

Loan facility – The surrender value of this policy always keeps going up. You can easily avail a loan against the surrender value of the policy.

What are the various categories of whole life insurance policies?

  • Non-Participating whole life insurance
  • Participating whole life insurance
  • Pure whole life insurance
  • Limited whole life insurance
  • Single premium whole life insurance

A whole life insurance is not only beneficial for your, but also for your family; it is an excellent investment option to grow your wealth while assuring safety to your loved ones.