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What Are the Different Types of Whole Life Insurance Policies?

28-07-2022 |

Life insurance plans are financial instruments that help secure your family in the event of your unexpected death. Insurers have introduced different life insurance plans to extend benefits based on individual requirements. A whole life insurance policy is one such plan that provides the necessary financial benefits to your nominee in the event of your death at any time. There are different types of whole life insurance plans.


Before getting into the details, let us understand what a whole life insurance plan is and how it differs from other life insurance plans.




What is a Whole Life Insurance Plan?


A life insurance plan provides a death benefit to your nominee in the event of your unexpected demise during the policy term. On the other hand, a whole life insurance plan is a life insurance plan that provides the death benefit to your nominee in the event of your unexpected death at any time. Thus, it ascertains the life cover benefit until death, provided the policyholder pays the premium timely.

 

Generally, the maturity age for a whole life plan is 100 years. However, it depends on the insurer's terms and conditions.




Types of Whole Life Insurance Plans

 

Life insurance plans are provided to the policyholders with varied features to help them utilise the product maximally. There are five different types of whole life insurance plans.

  • Non - Participating Whole Life Insurance Plans - It is a life insurance plan that provides life coverage to the policyholder that ascertains the sum assured to the nominee in the event of their unexpected demise.

    Apart from the life cover, the policyholders will not receive any share of the profits earned by the insurance provider as a bonus1 or dividend in a non - participating whole life insurance plan. It is cost-effective compared to the participating whole life insurance plans.

  • Participating Whole Life Insurance Plans - It is a life insurance plan that provides additional financial benefits in the form of bonuses1 or dividends apart from regular life coverage. Like any other organisation, a life insurance company also makes profits every financial year. The insurers will provide these profits to the policyholders who have purchased the participating whole life insurance plans.

    The profits earned are provided to the policyholders on an annual basis predominantly. However, the payouts differ based on the performance of the company. The bonuses1 earned out of a participating whole life insurance policy can be used to offset premiums that have to be paid later, to accumulate and earn interest, receive as cash payouts, etc.,

 

  • Level Premium Whole Life Insurance - A level premium whole life insurance is a variable whole life insurance plan wherein the premium rate remains constant and is not subject to increase for any reason. When the policyholder pays the premium regularly through the policy tenure, the sum assured is ascertained to the nominee in the event of their unexpected death.

  • Limited Premium Whole Life Insurance - In a limited payment life insurance, the policyholder will have to pay the premium for a limited term. However, the life coverage is for the whole life or until 100 years. The premium is paid for a limited number of years. Considering the benefit of paying the premium for a limited period, it is available at a slightly higher rate. It is beneficial for people planning to pay the premium until retirement while ascertaining the life cover benefit until death.

  • Single Premium Whole Life Insurance - It is a whole life insurance plan that a policyholder can purchase by paying a single premium during its inception. The sum assured is ascertained throughout life.

 

The choice of purchasing the type of life insurance plans will depend on the individual’s financial requirements and affordability. For example, if your sole objective is to secure your family's financial future, a non-participating whole-life insurance plan is ideal. And, if you can afford to pay an appropriate premium rate to participate in the company's financial interests to earn a profit, participating whole life insurance is a valid option.

On the other hand, if you want to keep paying a constant premium to safeguard your family, considering the increasing commitments, a level premium whole life insurance is the requirement. Furthermore, the limited premium whole life insurance plan is suitable for salaried employees who want to pay the premium until their retirement and secure their dependent family until death.

Life insurance plans are designated to ensure financial protection for your family. Insurers provide varied product solutions and flexible features to customise them based on individual financial needs. For example, Tata AIA Life Insurance provides flexible features such as increasing the sum assured at different milestones in life, opting to receive the payouts as a regular income, a combination of lump sum and regular income or as a lump sum. Modified whole life insurance will serve your financial needs optimally at an affordable premium rate.


Conclusion

Whole life insurance plans provide life coverage until death. Therefore, the death benefit is not restricted to a prescribed policy tenure like any other type of life insurance plan. There are different types of whole life insurance plans such as the participating, non-participating, level premium, limited premium and the single premium whole life insurance plan. The type of whole life insurance plan to be purchased by an individual will depend on the specific financial needs and affordability! 

L&C/Advt/2022/Jul/1701

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Looking to get a new plan? 

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+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA), Tata AIA Life Insurance is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

Who should buy a whole life insurance plan?

If you are an individual having a dependent family throughout your life and even after that, a whole life insurance plan is a necessity.

Can we purchase a whole life insurance plan online?

Yes, you can purchase a whole life insurance plan online. It is relatively easy to purchase, convenient and cost-effective. You can also utilise the online premium calculator to determine the premium for your whole life insurance plan based on your requirements.

Disclaimers

 

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • 1These bonuses are not guaranteed in nature. The Company may declare Cash Bonus rate annually in advance. The Cash Bonuses if declared, will be applicable provided all due premiums have been paid.

Need more information?

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.