Definition
Whole Life Insurance
Whole life insurance is a permanent life policy that provides cover for the insured's entire lifetime, often up to age 99 or 100, rather than a fixed term.
Unlike a term plan that expires at a set age, a whole life policy in India keeps the cover in force as long as premiums are paid, with the sum assured (plus bonuses, if participating) paid to the nominee whenever death occurs. Many designs allow limited premium payment so the policyholder pays for a fixed number of years but stays covered for life.
Whole life plans build a cash value that the holder can borrow against or surrender. They are sometimes used for estate-planning and inheritance purposes since the payout is near-certain. The trade-off is high premiums and low internal returns compared with buying term cover and investing the difference.
Related terms
- Limited PayLimited pay is a premium structure where the policyholder pays premiums for a shorter, fixed number of years while the cover continues for the full policy term.
- Cash ValueCash value is the savings component that builds up inside a permanent or savings-linked life policy, accessible through loans or surrender.
- Term InsuranceTerm insurance is pure life cover that pays your family a large sum if you die during the policy term, in exchange for a low premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.