10 Facts You Didn’t Know About Whole Life Insurance

Buy a whole life insurance plan as it secures you for even more than 100 years.

Buy a whole life insurance plan as it secures you for even more than 100 years.

Whole life insurance is a unique form of life insurance. As the name suggests, a whole life insurance plan covers the entire lifespan of the policyholder. There are some very important facts associated with whole life insurance and as a proposer, you must be aware of these facts before you buy a plan. Take a look at this article to know more about whole life insurance and then decide whether or not you want to buy such a plan.

Facts about whole life insurance

Here are the top 10 facts about whole life insurance:

  1. Whole life insurance covers your life: Whole life insurance is like any other form of life insurance that offers a life cover. If you die within the policy period, your nominees receive a death benefit and the policy terminates thereafter. You pay the premiums regularly to keep the plan alive and in return, the insurance provider covers your life.
  2. Aim of whole life insurance: The aim of a whole life insurance plan is to provide an investment option while keeping the investor’s life covered. Unlike other forms of life insurance, investment is the primary aim of a whole life plan. Insurance is the added benefit you get. If you are looking for a pure life cover, then a whole life plan may not be very suitable for you. A term plan would suit you more.
  3. To build up a corpus: A whole life policy is usually purchased to build up a corpus. The money is saved with the intention of paying off the policyholder’s funeral costs, to act as inheritance gifts for his children, or to pay off large mortgages. Whole life plans are not usually purchased to cover the unexpected death of the policyholder. It is rather bought to cover the long term, unavoidable costs and financial milestones of life.
  4. It is expensive: Because a whole life plan offers a continued coverage and also allows you to build up a large corpus, it is an expensive. It also offers a return on the investment, unlike a term insurance plan. These factors make whole life insurance one of the most expensive forms of life insurance.
  5. It is more of an investment: Like mentioned above, whole life insurance is a kind of an investment. You put in small amounts of money into the fund over a long period of time and the fund grows steadily. This happens while your life is covered. So if anything happens to you, your family gets the sum assured.
  6. Access to cash value: There is a common misconception associated with whole life insurance that the premium you pay gets fixed in for your whole life. This is not true as you can withdraw a part of the cash value of the fund if there is a requirement. You can also take a loan from the corpus you built. Some plans also offer regular payouts in the form of the dividends you earn. If you surrender the plan, you stand to get a lump sum amount as well. So there are many ways in which you can access the cash value of a whole life plan.
  7. Fixed premium: The premium you pay remains fixed throughout the tenure of the policy. So even if you keep the plan active for 70 years, the premium value doesn’t change.
  8. No impact on changing health: The premium you pay will depend on the health condition you had when the policy commenced. Over the decades your failing health will have no impact on the whole life plan.
  9. Long term investment: Whole life insurance is a long term investment. If your policy lapses in a year or two or you decide to surrender it before five years, you will stand to lose a lot of money.
  10. Smaller market: The market for whole life insurance is not as extensive as that of a term insurance. This is because a whole life has many unique features that don't always comply with the traditional norms of life insurance. Additionally, the high price tag is a factor too. So you need to assess your requirements very carefully before you buy a whole life plan.

Conclusion

Keep these important points in mind if you are planning to buy a whole life insurance plan. If you are sure you need such a plan, go online and compare your options. Then find the best plan and get yourself a great whole life insurance cover.

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