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Whole Life Insurance: Best Plans, Benefits & Eligibility

By Kapil Dwivedi
  | Published: 22 February 2021

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What Is Whole Life Insurance Policy?

Losing a loved one is not just emotionally but financially traumatic at the same time. Whole life insurance provides a guaranteed payout that ensures that your family members do not have to struggle for mere necessities when you are not around to take care of their needs.

A whole life insurance policy is an insurance product that protects your loved ones and family members against the strokes of uncertainties as it provides coverage for the entire lifetime.

The death benefit allows the deceased’s family to repay outstanding financial obligations. Whole life insurance policies are one of the most popular forms of insurance not just in the UAE but globally mainly because it offers a guaranteed payout.

How Does Whole Life Insurance Policy Work?

The basics of whole life insurance are quite similar to any other conventional insurance product. The policyholder pays an amount at regular intervals in return for services which is known as the premium. The insurer guarantees a cover amount that is payable at the demise of the policyholder to the nominee. The premium paid by the policyholder in real-time is actually for the services instead of the cover.

The premium paid is allocated for providing coverage in case of any event leading to the disability or demise of the policyholder. The death benefit obtained from the policy can be used to cover funeral expenses, pay for outstanding liabilities and leave a small legacy for your family.

Features and Benefits of Whole Life Insurance

The key features and benefits of whole life insurance policies are as follows-

  1. Coverage for Entire Lifetime

As the name suggests whole life insurance policies provide coverage for the entire lifetime of the buyer, unlike regular term insurance plans that provide coverage for a specific term. These plans are suitable for long-term financial planning for your family and loved ones.

  1. Leveled Premiums

One of the main distinguishing features of whole life insurance policies is the leveled premiums. Conventional term insurance plans charge a constant premium throughout the term of the plan. However, in the case of whole life insurance plans, the premium is leveled due to which the premium after a period either increases or decreases based on the plan chosen by the customer.

The payable leveled premium for a whole life insurance policy is calculated by averaging the premium over a longer course of time. In this way, the policyholder has to pay comparatively higher premiums at the beginning of the policy which gradually reduces.

  1. Cash Value

Cash value plays a vital role in building the investment component of a plan. Apart from the death benefit whole life insurance allows users to build up a savings component with every premium paid. With this approach, the policyholder not only secures the financial future of their loved ones but also adds to the overall savings thereby building a financial asset.

Individuals who are unable to plan their retirement separately via a retirement plan can opt for a whole life insurance policy that will help them to build a corpus for the twilight years of their life. Policyholders can apply for the loan based on their insurance plan during financially unstable phases of life.

  1. Financial Support for Your Loved Ones

Whole life insurance plans are the perfect tools to secure the future of your loved ones. With this plan, you can ensure that your loved ones won’t have to struggle for mere necessities when you are not around to take care of them.

Types of Whole Life Insurance Policies

The types of whole life insurance policies are as follows-

  1. Participating Plans

Participating whole life insurance policies refer to plans where the policyholder can obtain higher growth financially due to the addition of the cash value component to the basic plan. If the investment part of the insurance company performs well, the accounts participating are liable to receive cash payments.

Generally, participating plans tend to cost more than other types of whole life insurance policies because of the cash value component addition over the basic coverage. An important point to be kept in consideration here is that there is always a degree of risk associated with the cash value components and therefore the dividends are variable.

  1. Non-Participating Whole Life Insurance Plans

The non-participating whole life plans are the most common and popular type of insurance. It encompasses a guaranteed death benefit throughout the policy period. Technically, non-participating whole life insurance plans do not include a cash value component. A non-participating policy considers a low degree of risk in comparison to other forms of insurance.

  1. Constant Premium Plan

Constant premium plans are popular insurance products that provide financial coverage to the policyholder’s family at a uniform premium. The payable premium remains constant throughout the policy period and is calculated by taking an average of the policy duration. The best part about constant premium plans is that the policyholder is exactly aware of the amount they owe to the provider for uninterrupted services.

  1. Limited Payment Plans

Some individuals prefer paying the premium of the life insurance plans over a short period instead of paying it in the long run. For such users, limited payment plans turn out to be quite effective as they can make the payment over a shorter period such as 10-20 years, instead of paying it over 40-50 years. With this approach, the buyer can ensure that the policy is in action even if they are not paying the premium over the entire policy period.

  1. Single-Premium Plans

In the case of single-premium plans, users make the payment of premium in one go instead of breaking it down into multiple installments. The one-time payment made for the premium is usually a large amount and is used as an investment vehicle.

The primary advantage is that the policy is immediately paid in one go and can be utilized to borrow loans. However, the major drawback of these plans is that the single premium is that these plans charge a high submission fee if the user surrenders the policy in the first few years.

Why do we Need a Whole Life Insurance Policy?

Some of the major due to which one needs a whole life insurance policy are as follows-

  • The first and foremost reason is the financial support and assistance that is provided to the family of the insured in case of an event leading to the demise or disability of the policyholder.
  • To fund your child’s education, marriage, and other needs
  • To build a corpus in using cash value for the twilight years of your life
  • To ensure that you have additional funds to counter unforeseen events such as illness, loss of job
  • To pay for other lifestyle requirements and necessities

Best Life Insurance Companies in the UAE

The UAE insurance market has grown substantially within the past few decades with the rising demand for insurance plans for both expats as well as Emiratis. In this section, we will discuss about some of the top-rated companies that offer the best whole insurance plans in the UAE. Here’s a quick rundown-

  1. AXA

Axa is a French insurance company that offers a wide range of insurance products not just in the UAE but across the globe. The company is headquartered in Paris and is known for its innovative lineup of products designed on the basis of customer needs.

  1. Zurich

Zurich is a Swiss company that renders insurance services and products in the UAE. Whole life insurance plans are one of the most popular products offered by the company across the Middle-East.

  1. LIC International

LIC is an Indian insurance company that offers services in Sri Lanka, Nepal, UAE, and Bangladesh by the name of LIC international. It is one of the most reliable and popular insurance brands that is known for its high claim settlement ratio and best whole life insurance plans.

  1. MetLife

MetLife is one of the biggest market players in the insurance industry offering a wide range of insurance solutions.

  1. Noor Takaful

Noor Takaful is a shariah-compliant financial institution that offers insurance and banking solutions across the middle east. It is one of the top-rated and most popular insurance providers in the UAE.

Who can Buy Whole Life Insurance Policy

Any individual looking forward to supporting their family or loved ones should opt for a whole life insurance policy. With the right plan, one can ensure that their loved ones are financially secured even when they are not around to look after their needs. Whole life insurance plans are not just designed for primary breadwinners or professionals but housewives, women, and even children.

How to Buy Whole Life Insurance Policy?

The Internet has made our life easier whether it's buying a smartphone or a whole life insurance policy, you can do it simply with the click of a button. Within the past few decades, the inclination of customers has been over the online side of the market as a result of which providers have started to emphasize online sales. However, conventional offline sales is still existent and can be chosen based on the choice of the buyer.

Online

The first step in purchasing the best whole life insurance policy begins with research. You can make use of online web aggregators to compare and shortlist different providers and plans available in your region. After comparing different plans analytically you can choose the plan and visit the provider’s website to purchase the plan. All you need to do is fill in the required details, post the documents and make the payments and you are covered for your whole life. After a couple of days, you will receive the documents of the policy by post or mail.

Offline

In case you want to purchase a whole life insurance policy offline you can simply contact your nearest provider and apply for the plan by making the payment and submitting the required documents.

Alternatives to Whole Life Insurance Policy

There are numerous insurance products available in the market that can be used as alternatives to whole life insurance plans. However, it is important to assess your insurance needs and make sure you choose the right product based on your budget and requirements. Some of the products that can be used as an alternative to whole life insurance policies are as follows-

  • Term Life Insurance
  • ULIPs
  • Endowment Plans
  • Term Plans

Whole Life Insurance vs Term Life Insurance

In this section, we will compare whole life insurance and term life insurance. The tabular comparison is as follows-

Term Insurance

Whole Life Insurance

Valid for a specific term

Valid for the entire lifetime

No Investment element

Investment element

Yearly or monthly option of premium

Monthly, quarterly, half-yearly, annual option of premium payment

No maturity benefit

Maturity benefit

Less Expensive

Comparatively more expensive

FAQs about Whole Life Insurance

Q.1. Why are whole life insurance plans considered a good option?

Ans.1. The whole of life insurance plan is considered to good insurance option because it provides coverage till the age of 100 or whole life. At the same time, it allows users to leave a legacy for their loved ones and family members.

Q.2. Can a policyholder opt for a loan on the whole insurance policy?

Ans.2. Yes, based on your whole life insurance policy the user can opt for a loan.

Q.3. Is whole life insurance suitable for senior citizens and retirees?

Ans. Technically, it is not that suitable for senior citizens and retirees. However, if purchased at the early stages of life whole of life insurance plans can turn out to be an extremely useful and effective product.

Q.4. Is a whole life insurance policy costlier than a term life insurance policy?

Ans.4. The whole of life insurance policies is usually expensive in comparison to term life insurance policies due to difference in term of coverage and policy period.