Whole Life Insurance: A Great Way to Secure your Family Financially

A whole life insurance policy is a policy that covers you until the period of 99 years of age. Whole life insurance policy is different from the other counterparts offered by the insurance service providers that have a tenure of about 30 years at the maximum. A whole life insurance policy is sensible for those people who want to leave their children and spouse with sufficient funds to stay less stressed after their demise. The whole life insurance policy also brings you an opportune moment of leaving a tax-free inheritance for your children apart from the regular assets. 

How to leverage an investment in whole life insurance to secure the finances of your family?

Whole life insurance is paid out to your beneficiaries after your sad demise. It also has a cash savings component, which the policy owner can draw from. The cash value of a whole life insurance policy typically earns you a decent fixed rate of interest.

A whole life insurance policy gives your dependants the sum insured after your demise. Several riders and add-ons can supplement your insurance policy for the better. The riders come in the form of the accidental death benefit, critical illness benefit, terminal illness benefit, permanent disability benefit, lumpsum income payment, etc.

To leverage whole life insurance to secure your family’s future you need to do the following:

  1. Assessing your financial needs will give you an estimate of what cover you will need. To assess your financial needs, you need to take into consideration your current age, income, and lifestyle habits. Once you do this, you will get an estimate of your average expenses. 
  2. The whole life insurance policy also requires you to understand your retirement goals prior to investment. An understanding of what your retirement goals are, allows you to plan accordingly. You can also account for the factors such as security for your dependents after your demise. 
  3. The cost of whole life insurance in terms of the premium may seem costly, however, most people fail to account that the tenure for a whole life insurance policy is quite long and its main purpose is to be able to provide your dependants with a sum that can suffice their needs for a substantial period. 
  4. The premiums for the whole life insurance policy remain fixed over the tenure. This allows you to experience lighter weight on your pockets in the end as inflation kicks in and reduces the value of money over time. One added benefit of making an investment in the whole life insurance policy is that you are eligible for a tax deduction of Rs. 150,000 under section 80C of the Income Tax Act, 1961, along with this under section 10(10D) the sum that you will claim on maturity is also exempt from tax. 

Investing in a whole life insurance policy may seem like an eccentric choice but considering the purpose for which the policy is offered makes it a sensible choice. Although, one should always research and understand it before investing any sum.