Whole Life Term Insurance

When it comes to making sure your loved ones are protected in the event of your passing, there's nothing quite like a whole life insurance policy. A whole life insurance policy provides coverage for your entire life and offers a lot of benefits that other types of policies do not.

Types of Whole Life Insurance Policies

Participating Whole Life

Participating whole life insurance allows the policy owner to participate in the insurance company’s profits. Although these payments are not guaranteed, most companies have rarely skipped a year of distribution.


Universal Whole Life

Universal Whole Life Insurance is a permanent policy that offers lifelong coverage and a savings component. With a guaranteed death benefit and a cash value that grows at a fixed interest rate, the policyholder can use the savings for premiums, withdrawals, or loans.

Variable Whole Life

It has a guaranteed minimum death benefit and the cash value can be invested in different investment options. Policyholders can adjust their investments, but higher fees and premiums come with the investment component. Those who cannot commit to long-term payments may not find it suitable. 

How Whole Life Insurance Differs from Term Life Insurance

While whole life and term life insurance policies provide life insurance coverage, the two differ in several ways:

Whole Life Insurance

  • Lifetime coverage
  • Fixed premiums
  • Savings component

Term Life Insurance

  • Coverage for specified term
  • Premiums may increase at renewal
  • No savings component

Investment Component of Whole Life Insurance

The investment component of a whole life insurance policy is also known as the cash value component. It is a savings account within the policy where a portion of the premiums paid by the policyholder are invested by the insurance company. The cash value component grows over time and accrues interest on a tax-deferred basis. The investment component of whole life insurance is often used as a long-term savings and investment strategy for individuals who want to provide for their families after their death while also building wealth over time.

Risk of Surrendering Whole Life Policy

If you want to surrender your policy, whether you’ve found a better deal or can’t afford your life insurance premiums. Now you’re wondering when you should surrender the policy. The good news is there are generally no restrictions on when you can surrender a life insurance policy – as long as you’ve made it through the surrender period. This period varies by policy and could be a couple of years to over 5 to 15 years.

However, most policies require you to pay surrender fees when surrendering a policy. A surrender fee is a amount that the life insurance company charges for you to cancel your insurance contract early. Surrender charges often decrease over the policy’s life, with some disappearing entirely after a specific time. That means the longer you wait to surrender the policy, the less you’ll likely pay in surrender fees.

Tax Benefits of Whole Life Insurance Policy

A Whole Life Insurance Policy provides various tax benefits under the Income Tax Act 1961.

Section 80C

Premiums paid towards Whole Life Insurance Policy are eligible for a deduction under Section 80C of the Income Tax Act. However subject to certain conditions.

Section 10D

The maturity proceeds from the ULIP are tax-free under Section 10D of the Income Tax Act. However subject to certain conditions.

FAQs about Whole Life Insurance Policy

If you're considering buying a Whole Life Insurance Policy then you might have some additional questions. Here are some common FAQs to help you make an informed decision.

Is a medical exam required to get a Whole Life Insurance Policy?

In most cases, a medical exam is required to obtain a Whole Life Insurance Policy. The purpose of the medical exam is to evaluate the applicant's health status and determine the level of risk they represent to the insurance company.

Can I change my beneficiaries after purchasing a policy?

With a life insurance policy, you can usually change beneficiaries at any time by completing a beneficiary change form provided by the insurance company.

What happens if I miss a premium payment?

If you miss a whole life insurance policy premium payment, your policy may enter a grace period which is typically a 30- or 31-day period during which you still have the opportunity to pay your premium. During this grace period, your policy remains in force and your beneficiaries would still be entitled to a death benefit should you pass away. However, if you do not pay the premium during the grace period, your policy will lapse which means the coverage will be terminated.

Can I convert my Whole Life Insurance Policy into a different type of policy in the future?

Yes, it is possible to convert a whole life insurance policy into a different type of policy such as a term life insurance policy or an annuity policy. This conversion usually comes with some conditions, such as having to meet certain health standards or having to convert within a time period specified by the insurance company.

Why Consider a Whole Life Insurance Policy ?

Whole life insurance provides lifelong coverage and financial security for loved ones in the event of your death while also building cash value over time that can be borrowed or withdrawn. Despite higher premiums than term life insurance, rates are guaranteed and won't increase with age or health changes, making it a reliable choice for long-term financial protection and savings.