Money

Is Whole Life Insurance Policy A Good Investment in India?


Life insurance policy is best means to financially protect your family in case of emergency or when you are not around. Under whole life insurance the policy assures the individual a lump sum payment on the death of the insured or on completion of the term of the policy. This policy is apt for all who wish to financially secure their family in case of sudden death of a family member.

In India there are number insurance companies but before you invest in policy it’s important to compare and look into the contract term, premium, cost and benefits that pertains to the insurance.
Related: 10 Best Life Insurance Policies in India.

Points to remember before investing in a policy

It’s also important to check the solvency or credibility of the insurance company. You should ample research and see if they are able to pay off the claims as promised to the investors. It’s also important to

You should have a clear idea as to why you need a policy. Are you interested in insuring your whole life or looking for a retirement option or a good plan for securing your child’s education? Depending on your key factor you can choose an apt insurance policy.

You should also have an idea on total insurance cover you require. Higher insurance cover means higher premiums and it’s always advisable to choose a cover whose premium is within your budget.
Related: Tips for beginners taking a life insurance policy in India.

Advantages of whole life insurance policy

This is a long term insurance scheme and the idea is to get protection for your entire life.

Unlike other insurance policies the premium for whole life insurance is fixed and it will not fluctuate with market changes or rising prices.

Whole insurance policyholder is also entitled to tax benefits.

The nominee or surviving relative is definitely assured of lump sum payment upon the death of the policy holder. One condition provided that all the premiums are paid and the policy is still active.

Whole life insurance is another form of forced savings and it is like an amount set aside for a future emergency.

Disadvantages of Whole Life Insurance

Premiums are pretty high as the total cost of the insurance is spread over the whole life term of the insurer. So if a person takes up a policy when he is young, premium paid, might turn out to be expensive as it covers his whole life time. Whereas an older person the premiums paid will be comparatively lower.

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This is a long term policy and many financial upturns can happen in these years. Higher insurance cover means higher premiums and it’s always advisable to choose a cover whose premium is within your budget.

Early termination of the whole life insurance could cost you a lot as major portion of the initial few premiums would have gone to pay off the agents commission, administrative and other fees.

Types of Whole life insurance policy of LIC

Let us check some type of whole life insurance policies available in India from LIC.

Jeevan Tarang

Jeevan Tarang is a whole life insurance policy offered by LIC and as per policy you get the lump sum amount at the end of the accumulation period or upon death of the insurer.The policy offers an accumulation period of either 10,15 or 20 years and the premiums can be paid monthly, quarterly, half yearly or yearly as per your convenience.

Documents required for the policy

Passport size photo, photocopy of age proof, address proof, ID card and graduation certificate.

Payment can be done by cash, cheque or DD in favor of LIC of India.

Features

At the end of the every year a survival benefit of 5½% of the sum assured will be carried forward and it will be payable as bonuses in lump sum at the end of accumulation period.

Upon the death of the insurer during the accumulation period the sum assured along with the bonuses is payable. Incase death happens after the accumulation period then sum assured along with loyalty addition is payable.

On complete maturity of the policy the insurer receives lump sum amount of sum assured along with loyalty additions.

Whole Life Policy

This is a basic whole life insurance policy where in the total sum assured along with the bonuses is paid on the death of the insured. But certain changes have come about and the total sum assured along with bonuses is paid upon completion of 40 years of the policy or when the insurer completes 80 years of age.

Documents required for the policy

Passport size photo, photocopy of age proof, address proof, ID card and graduation certificate.

Payment can be done by cash, cheque or DD in favor of LIC of India.

Features

The basic idea of whole insurance is provide financial security in time of unexpected death of Life Assured.

Upon the death of the insurer the whole sum assured along with bonuses is to be paid.

Also read >  10 Best Insurance Companies in India

Upon maturity ie either completion of 40 years of the policy or when the insurer completes 80 years of age the sum assured along with bonuses is paid off.

The insurer can also avail additional benefits but this would mean higher premiums.

You also have an option to surrender your policy after completing 3years.In such a situation you will paid 30% of the basic premiums but the first years premium will be excluded.


Hi, Mani Karthik here. Having lived in USA, India & Middle East, and worked for big MNC’s to startups, I have a lot to share with you. My aim is to help people, by sharing everything I’ve learned in life, through this blog. It’s read today by more than 150K people world over! I currently live in LA, California and visit India occasionally. Here’s my full story on who I am and why I blog. Connect with me on FBInstagram, Twitter or WhatsApp (+001-408-489-4785). Happy to help! 🙂

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