Whole Life Plan Financial Security of the Family and the Loved one.
Whole life insurance plans are a type of life insurance plan which provides insurance coverage to the policyholder for the whole life i.e. up to 100 years of age, provided the policyholder pays the premiums of the policy on time. A whole life insurance plan offers guaranteed death benefit to the beneficiary of the policy in the event of an unfortunate demise of the policyholder during the tenure of the policy. The insurance holder can decide the sum assured amount at the time of policy purchase.
A whole life insurance policy covers as long as you live. As it offers risk coverage for the entire life, It offers the dual benefit of life coverage and bonus. The premium is paid for the first 10-15 years and the insurance cover is extended till the entire life of the insured. For instance, if you are 30 years old and you opt for the whole life plan whose sum assured is Rs 30 lakh, then you would stop paying a premium when you are 45 years of age but the coverage would last for your entire life. The premium is paid only for a limited duration and therefore, it is high. By without having proper insurance coverage one can always be exposed to financial uncertainties of life. Thus, to safeguard the family financially it is very important to have a life insurance plan.
TYPES OF WHOLE LIFE INSURANCE PLANs:
A whole life insurance policy : It is a type of life insurance policy. Whole life insurance protects the insured against death, whenever it may happen. It means that there is no fixed term under whole life insurance. Most policies provide a dividend to the policyholder which helps with retirement. Whole life policies provide insurance until the death of the insured person. Whole life policies are classified into.
Non-Participating Whole Life Insurance : This is a low-cost life insurance policy which offers the feature of face amount and level premium. As a non-participating policy, the plan does not pay any dividend and nor does receive any bonus facility.
Pure Whole Life Insurance : Under this plan option, the premiums are paid continuously throughout the life of the insured until death. Risk coverage is for the entire duration of life and the sum assured is paid after the death of the insured.
Limited Payment Whole Life Insurance : Under this plan option, the policyholders are required to pay the premium of the policy regularly for the entire tenure of the plan. The premium of the policy remains constant for the whole tenure of the plan. Where the insured pays a fixed number of premiums for a specific number of years or till he/she reaches a specific age. Risk coverage is however throughout the life of the insured.
Single-Premium Whole Life Insurance : Under this plan option, the entire premium of the policy is paid at one go. Under this plan option, a large sum assured amount is paid as a guaranteed payment to the beneficiary of the policy.
BENEFITS OF WHOLE LIFE INSURANCE POLICY:
Whole Life Coverage : Whole life insurance provides coverage to the policyholder until 100 years of age. The policy protects the insured until death.
Guaranteed Life Coverage : The whole life insurance assures the financial security of the family and the loved ones even in the absence of the breadwinner of the family.
Periodic Payments : At the time of policy maturity, the policyholder receives the lump-sum amount as maturity benefit along with the bonuses, if any. Moreover, some of the whole life insurance plans also offer maturity benefit in the form of regular income. Thus, at the time of maturity of the policy, the insured can choose the avail the maturity benefit as a lump-sum amount at one go or as regular income at specific intervals of time.
Tax Benefits : The insured can avail tax exemption under section 80C on the premium paid towards the whole life insurance policy. Moreover, the maturity claims are also tax exempted under section 10(10D) of ITA 1961.
In its basic form, a life insurance policy provides death benefits and is designed to cover loss of income, end-of-life expenses, funeral costs and other financial needs that a family may have if you – the policyholder – should die unexpectedly.
While death benefits are often designated for funeral expenses and income replacement, life insurance is a very flexible type of coverage that can be used in numerous ways.
For example:
Cost of living: Life insurance can cover your family's vital expenses after your passing, such as the payment of your mortgage, outstanding debts and children's college tuition.
Trusts and charities: You can use a life insurance policy to create trust as a financial legacy for your heirs, a chosen charity or other organization.
Retirement and estate planning: A permanent life insurance policy can be structured to cover your living costs during your retirement or for estate planning, and can even cover the cost of your life insurance premiums.
Business continuation: Business owners often
purchase life insurance that can help protect their business in the event they
die unexpectedly. For example, a business owner can construct a buy-sell the agreement that pays benefits to one or more surviving co-owners who can then
purchase the policyholders share of the enterprise.
Life insurance the policy is a contractual arrangement between you, the policyholder, and the life insurance company. The policyholder determines the amount of life insurance coverage required and pays the life insurance company a premium to keep the policy in force.
The way the premium will be paid will also be spelt out in the policy. The premium could be paid to the life insurance company as a lump sum, an annual or semi-annual payment, or monthly amount, for example. The premium must be paid according to the terms of the policy to keep the life insurance policy active.
Should the policyholder dies while a life insurance policy is in force, then the life the insurance company will pay out the death benefits specified in the policy. Additionally (applicable to permanent life insurance policies only), the insurance company will accumulate a cash value.
Death proceeds are paid as a lump sum to the named beneficiary (the person who will receive the life insurance benefits), as stipulated in the policy.
Life insurance proceeds are usually not taxable if they are paid to a specifically named beneficiary, such as your spouse or children. The life insurance proceeds may become taxable, however, if you name your estate as the beneficiary. At that point, the proceeds become a part of your estate and can be subject to estate taxes.
Life insurance can protect your family from becoming financially burdened if you unexpectedly die, especially if you are the primary income earner for your household. Life insurance proceeds can help your loved ones cushion the economic impact that may occur as a result of your death.
Life insurance is important for different individuals for different reasons. For some people, it is important to cover end-of-life costs while others want to create a large financial legacy for their dependents and heirs.
Some people want a life insurance policy that will help their business continue to flourish after their passing. Others want to create an endowment that will benefit an important cause or institution.
Life insurance policies have helped many families at a time of need when a primary income earner dies. When that happens, the family can be left with additional expenses and fewer financial resources.
Living expenses, funeral expenses, debts, mortgage or rent payments and education costs can all create an enormous financial burden for a family when a primary income earner passes away.
Unfortunately, a large percentage of families today lack any form of life insurance, leaving open the possibility of financial hardship. Term Life insurance is a highly affordable policy that can help prevent this scenario.
An independent agent in the Trusted Choice network can help you get quotes and determine if life insurance makes sense for you.
Buy life insurance as soon as you determine that it makes sense for you or your family. Waiting to buy life insurance is costly, as it becomes more expensive as you age. It is also easier to qualify for life insurance when you are young and have no health complications.
Many people buy life insurance as their circumstances change. When you get married, for example, you may consider purchasing life insurance to provide death benefits to your spouse in the event of your untimely passing. It is a good idea to evaluate your life insurance anytime you have experienced a change in your overall financial obligations.
For example, you may want to buy life insurance or increase your coverage under these circumstances:
1. When you get married
2. When you start a family
3. When you buy a house
4. When you start up a business
5. If you accumulate personal debt
Life insurance can help to prevent the loss of your income and your debt accumulation from being passed on to your family as a financial burden after your passing
Your life insurance policy coverage should reflect these and other foreseeable financial obligations.
When you buy life insurance, decide what you want your life insurance to pay for and what expenses your survivors will need to cover without your help.
Next, you should research life insurance and choose the type of policy that makes the most sense for you. Life insurance companies vary considerably, as do the policies they offer, the rating systems used, and the premiums they charge.
Research the life insurance companies you are considering to ensure that those companies are financially stable and highly rated by an independent insurance rating body, such as A.M. Best.
An independent agent in our network who specializes in life insurance can help you review several different high-quality companies, as well as the benefits of different types of life insurance policies. Your agent can answer all of your questions and help you make an informed decision about the type and amount of life insurance that makes sense for you.
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Death Benefit:
In the event of the uncertain demise of the insurance holder during the tenure of the policy, the death benefit is paid to the nominee. The death benefit is paid as a total sum assured amount to the beneficiary of the policy by the insurance company, provided all the premiums of the policy are dully paid.
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Guaranteed Premium:
Under the whole life insurance policy, the premium rate of the policy is set for the entire tenure of the policy and does not increase or decrease throughout the term period of the policy. So, if the insured pays a premium of Rs.2500 per month, then he/she will continue to pay the same premium for the whole tenure of the policy.
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Protection for Life:
Whole life insurance plan is specifically designed to provide life protection to the family of the insured in the form of payment of guaranteed sum assured along with bonuses if any in the of policyholder's demise.
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Tax Benefit:
The premium paid towards the policy and maturity proceeds is tax exempted under section 80C and 10(10D) of Income Tax Act 1961.
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Loan Facility:
After the completion of 3 years of the policy, the insurance holder can avail loan against the policy.
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Tax Benefits-:
Term Insurance plans offer tax benefits on premiums paid under Section 80C . New-age Term plans with critical illness cover also offer additional tax benefits on premiums paid under Section 80D. You also get tax benefits under Section 10(10D) on the money that your family receives in case of an unfortunate event
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No accumulating Cash- :
This is a policy where there is no payouts, accumulation or survival benefits which could accrue to the Policy Holder. The family gets a guaranteed SA incase of the unfortunate death of the Insured.
- Premium Fixed-: A guarantee on the premium for a defined amount of years which means the premium fixed at the time of buying the Policy it doesn’t change with the growing age.
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High Life Insurance Amount- :
Term insurance plans provide a high life insurance amount at affordable premium.
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Life Insurance Claim Process:
The main purpose of taking an insurance policy is that it should come in use in times of crises. In this article, we will look at the different types of life insurance claims and how the settlement process works.
Selection of the right policy from a good life insurance company with a healthy claim settlement ratio is the main requirement for buying life insurance. The main function of an insurance company is to ensure easy and timely settlement of a valid claim in return for the premium paid by the insurer/ policyholder.
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Death claim settlement process:
The main purpose of taking an insurance policy is that it should come in use in times of crisis.
Death claim settlement process
Step One: Intimation to the insurance company about the claim.
The nominee should inform the insurance company as soon as possible to enable the insurance company to start with the claim process. The details required for intimation are policy number, name of the insured, date of death, cause of death, place of death, name of the nominee, etc. The claim intimation form can be obtained from us or even by downloading it from the insurance company website.
Step Two: Documents required
1. The nominee will be asked to furnish the following documents:
2. Death certificate
3. Age of the life insured (if not already given)
4. Original Policy document
5. Any other document as per the requirement of the particular insurer or case-related.
6. For early death claims i.e. the claim that has arisen within three years of the policy is in force the company will do an extra investigation to ensure it is a genuine claim. They might do the following:
>> Check with the hospital if the deceased was admitted to the hospital.
>> In case of an air crash confirmation from the airline, authorities check if the policyholder was a passenger on the plane.
>> In case of death from medical causes, the insurance company will ask the hospital to provide doctor's certificate, treatment records etc If the policyholder dies due to murder, suicide, accident then police FIR report, post mortem report etc shall be required.
Step Three: Submission of required Documents for Claim Processing
For quicker claim processing, the nominee must submit complete documentation as early as possible and any other documents that the company needs to pass the claim.
Step Four: Settlement of Claim
As per the regulation 8 of the IRDAI (Policy holder's Interest) Regulations, 2002, the insurer is obligated to settle a claim within 30 days of receipt of all necessary documents including extra documents sought by the insurer. If the claim requires further investigation, the insurer needs to complete its procedures within 6 months from receiving the written intimation of claim.
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Maturity & Survival Claims:
The payment made by the insurance company on completion of the term of policy or maturity date is called maturity payment. The amount payable consists of sum assured plus any bonus/incentives.
The insurance company informs the policyholder in advance by sending bank discharge form for filling details in it. The form needs to be returned to the insurance company with an original policy document, ID proof, Cancelled Cheque and copy of passbook.
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Rider Claims::
Different riders can be attached to the base life insurance policy for enhanced protection. The riders can be an accidental rider, critical illness rider, waiver of premium rider etc. For different riders, different claim proceedings are required. Some riders may be valid with the death claim like accidental death rider or some riders need to processed standalone like a waiver of premium rider in case of disability.
For Critical Illness Rider- necessary medical documents such as first diagnosis report, Doctor's report, etc are required. For Accidental disability rider - a copy of FIR, Certificate of disability by the treating doctor, doctor's report etc are required.
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Step by Step Process of Term Insurance Claim Settlement:
INFORM THE INSURANCE PROVIDER ABOUT THE CLAIM
In order to enable the insurer to start the process of claim, the nominee should inform the insurance company as soon as possible. The required details for the intimation of claim are the name of the policyholder, policy number, date of birth of the insured, place of death, the cause of death, the name of the beneficiary, etc. The beneficiary can avail the claim form either from the nearest branch of the insurance company or can even download it from the website of the insurance company. Moreover, the beneficiary can also fill the form online and file the claim.
DOCUMENTS REQUIRED
The documents that should be kept handy while filing the claim are:
- Death certificate
- Age of the policyholder
- Original documents of policy
- Any other documents according to case-related or according to the requirement of the particular insurance company.
