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WHOLE
LIFE POLICY |
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Whole
Life Policy
 What is Whole Life Policy?
How is it beneficial to
me?
Who should buy this plan?
What
is Whole Life Policy?
A
typical whole life policy
runs as long as the policyholder
is alive. In other words,
the risk is covered for
the entire life of the
policyholder, which is
why they are know as whole
life policies.
The
policy monies and the
bonus are payable only
to the nominee of the
beneficiary upon the death
of the policyholder. The
policyholder is not entitled
to any money during his
or her own lifetime, i.e.
there is no survival benefit.
This
represents a serious drawback
in the case of whole life
policies. Suppose, for
instance, you buy a whole
life policy at the age
of thirty when your children
are young and the family
needs protection. Conceivable,
by the time you are 55
or 60 or so the children
may be well settled, no
longer truly needing the
protection the whole life
policy provides. On the
other hand, you would
probably require the money
for yourself and your
wife in your retired life
but this would not be
possible since the sum
assured is payable only
when the policy holder
dies.
In
this sense whole life
policies are fairly rigid
and inflexible and are
suitable only in a few,
very specific cases.
However,
given the rigidity pointed
out above we would advise
you to be careful about
buying a whole life policy
when you are young. Your
insurance portfolio is
best built around endowment
policy. The one exception
is the Convertible Whole
Life Policy.
On
the whole, whole life
policies may be best considered
after the age of 45 either
for the purpose of leaving
behind an estate for one's
heirs or for covering
the possibility of premature
stoppage of pension income
in the case of relatively
early death after retirement.
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How
is it beneficial to me?
Whole
Life Policy can be a good
initial policy to buy
since its cost is very
low. That is an important
consideration when one
is just starting a career.
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Who
should buy this plan?
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This
is particularly
beneficial for those
who are eligible
for a sizable pension
during their retired
life, a whole life
policy can be very
useful in covering
the risk of death
taking place - and,
therefore the pension
coming to an end
- soon after retirement.
In such a case a
whole life policy
serves as financial
compensation to
the family for the
early loss of pension.
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A
whole life policy
will also come in
handy for those
who wish to create
an estate either
for their heirs
or for donating
to charity after
their death. The
ideal age to consider
a whole life policy
for such a purpose
is around your 50th
year. By then one
would have provided
for the maintenance
of one’s family,
education and marriage
of one’s children,
etc., as also for
one’s own old
age. This is the
time for one to
consider leaving
something behind
for one’s heirs.
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