Introduction
Whole life insurance refers to the type of permanent life insurance plan that provides lifelong coverage to the policyholder. It guarantees the death benefit to insured's family (nominees or beneficiaries) in case of death of the policyholder (insured person). In this post we are going to discuss some major characteristics of whole life insurance plan.
Key Features Or Characteristics Of Whole Life Insurance
The main features of whole life insurance can be highlighted as follows:
1. Lifelong Coverage
Whole life insurance provides coverage for entire life of the insured person. It never expires as long as premiums are paid.
2. Death Benefit
Another notable feature of this type of life insurance policy is that it provides death benefit to the beneficiaries if the policyholder passes away.
3. Higher Premiums
Generally, premiums in whole life insurance are higher than term life insurance plans because of lifetime coverage.
4. Fixed Premiums
Insurance premiums remain fixed (constant) throughout the life of the insured. No changes are made with the change in health or age of the policyholder.
5. Wider Scope
It has wider scope than term insurance because it never expires and provides lifetime coverage.
6. Tax Advantage
Another feature of whole life insurance is that it provides tax benefit to the policyholder. Insurance premiums can be deducted from taxable income that helps to minimize the tax amount.
7. Loan Facility
Insurance companies provide loan to the policyholders against the cash value of the policy. It does not require credit checks and interest rates are lower than other forms of loans.
8. Surrender Value
Whole life insurance policies can be surrendered after certain period. Insurance companies provide accumulated cash value to the policyholders.
Also Read
Advantages and disadvantages of life insurance
Difference between term insurance and whole life insurance
The main features of term life insurance
Advantages and disadvantages of whole life insurance
Advantages and disadvantages of term life insurance
9. Customizable
Whole life insurance is flexible in nature that can be customized as per the needs of the policyholders. Riders can be included to obtain more coverage and waivers.
10. Complexity
This type of life insurance plan is more complex than term life insurance. It is difficult to understand and requires lengthy and complex process to buy whole life insurance policy.