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Whole-Life Insurance

A Term Plan is a pure protection plan where you pay a premium for a very long tenure and do not get anything on surrender of the policy. Are you thinking that can there be any plan which provides me protection as well my money grows over a period of time?

There is an alternative to term plan – Whole life insurance – which is two forms – Endowment & Investment-Linked. This provides coverage for your life also. This policy not only offers protection but due to its savings component builds up a cash value also over a period of time. This implies that with this policy you will get higher returns, over and above your sum assured, in the unfortunate event of your death. Thus, leaving a much bigger corpus for your loved ones. But all this comes at a cost, so how do you decide whether to go for a term plan or whole life plan?

The main difference between the two – Term Plan & Whole Life Plan should be weighed on two parameters:

Tenure of the policy – How long it will protect you

How much amount you will get if you over live the policy

Though term plan is for a specified tenure, whereas Whole – life, as the name goes, it covers you for the entire life or till you play premiums. If you have budget constraint and protection is the aim, go for a term plan. But if you want sum assured and ROI also, but on a higher premium, go for Whole-Life policies.

Now another question, whether to for Endowment Plan or Investment-linked Plan?

Features of Endowment Plan:

*Protection and potential to grow savings

* Generally, up to end of the life

* Gives Sum assured & accumulated bonuses

* Cash Value – Guaranteed & Non-guaranteed bonuses

Features of Investment-Linked Plan:

*Protection & potential to reap investment funds

*Till the life ends

* Sum assured & value of a unit in funds

*Value of units and investment funds

So, take your pick, if the growth of investment is also your aim, go for Whole-Life policy as here you will get some sums even if you decide to discontinue the policy.

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