What is whole life ULIP ?
Whole life ULIP plans are ULIP plans that offer life coverage to the life assured for up to 99 or 100 years of age (depending on the Insurer). If the life assured passes away before reaching 99 or 100 years of age, a death benefit is paid. On the other hand, if the life assured happens to survive till maturity, the fund value is paid as the maturity benefit.
The policy term of the whole life ULIP depends on your entry age. For instance, if you buy the plan at 30 years of age and the plan runs till 100, that is for a policy term of 70 years. On the other hand, if you buy the plan at 40 years of age, the term becomes 60 years.
Besides the long-term coverage, whole life ULIPs work similarly to other ULIP plans. You can invest your premium in market-linked funds and enjoy returns on your investments (subject to the performance of the underlying fund) over the long-term horizon.
Is ULIP insurance a smart investment choice
ULIPs are considered a suitable choice since they provide you with the dual benefit of life insurance and market-linked returns. Plus, when you choose a whole life ULIP, you get life insurance cover for life, which adds to your financial security. If you are not around, the death benefit from the plan can offer your family financial support and help them fulfil their goals.
Plus, you can get the benefit of managing a part of your premium by fund switching , premium redirection, top-ups, partial withdrawals post the lock in period , and other flexible features , subject to policy terms and conditions.
Given these benefits and the financial protection offered, ULIPs can be a smart financial decision .
Key Benefits of Investing in Whole Life ULIPs
A whole life ULIP gives various benefits. Some of these benefits are as follows –
Whole Life Insurance Protection
The first benefit of whole life ULIPs is the whole life coverage that you get. This helps you get peace of mind. You can stay protected till 99 or 100 years of age for complete financial security.
Variety of Premium Payment Options
Though coverage runs lifelong, whole life ULIPs allow you to pay the premium for a limited tenure so that you can enjoy the coverage in your golden years. This means some plans offer limited timeframe for premium payment while the insurance coverage could last for a much longer tenure. Moreover, you can also pay the premiums annually, half-yearly, quarterly, or monthly, depending on your needs.
The Potential of Wealth Creation
ULIPs are market-linked plans which give you exposure to the financial markets. You can invest a part of the premium in equity, debt, or balanced funds and earn market-linked returns. Over time, these returns can grow (subject to the performance of the underlying fund) and help you accumulate a corpus for your financial goals.
Surrender Value
ULIPs provide liquidity in times of emergency with the feature of partial withdrawals after the lock-in period. Even if the coverage runs lifelong, you can withdraw from the fund value after the lock-in period of 5 years (subject to policy terms and conditions).
Alternatively, if you want to exit the coverage, you can do so by surrendering the policy and the proceeds of the discontinued policy will be payable at the end of lock-in period or date of surrender whichever is later.
Tax Advantages
Lastly, let’s not forget the tax benefits that you get. The premiums paid qualify as a deduction u/s 80C up to ₹1.5 lakhs1. The death benefit could be tax-free2 and you can also enjoy a tax-free maturity benefit u/s 10(10D)3, subject to specific terms and conditions.
How Are Premiums Structured in Whole-Life ULIPs?
The premiums of a whole life ULIP are allocated to the fund of your choice.
The premiums of a whole life ULIP are segregated into two parts. A part of the premium is used to pay for the life insurance coverage that ULIPs provide. The other part is allocated to the fund of your choice after deducting relevant charges.
Premiums can be paid annually, half-yearly, quarterly, or monthly. You can also choose the single or limited premium payment mode depending on your financial needs.
Do Whole Life ULIP Plans Come in Various Types?
Whole life ULIPs are unit-linked plans that provide coverage for life, typically till the age of 99 or 100 and aim to create a long-term corpus for your financial goals. Other types of ULIPs, like child based ULIPs or ULPP, are usually not offered for whole life since they are designed to fulfil specific goals.
Key takeaways
- Whole life ULIPs are ULIPs that provide life insurance coverage for 99 or 100 years of age.
- Whole life ULIPs can be a smart investment choice for the financial security that they provide, along with the potential to generate attractive market-linked returns over the long-term horizon.
- Some of the benefits of whole life ULIPs are lifelong protection, potential of wealth creation, tax benefits, and variety of premium payment options etc.
- You can buy whole life ULIPs to create a corpus for your long-term goals.
Conclusion
If you are looking for lifelong financial protection along with the possibility to create a market-linked corpus, whole life ULIPs can be a suitable choice. You can buy these plans to create a corpus for different types of financial goals. So, assess your financial needs and then choose a suitable whole life ULIP.
FAQs
What is a Whole Life ULIP?
A whole life ULIP is a ULIP plan which provides life cover to the life assured for up to 99 or 100 years of age ( depending on the Insurer) . The policy term is determined based on your age at entry, and then the plan runs till the maximum specified age. You get life insurance coverage throughout the policy tenure and also create a market-linked corpus for your financial goals.
How is a Whole Life ULIP different from a regular ULIP?
Under a regular ULIP, there is a defined tenure for which the coverage runs. However, under whole life ULIPs, there is no defined tenure.
This means that the policy runs for 99 or 100 years of age from the entry age. For instance, if you buy a plan at 30 years of age and the coverage is up to 100 years, the tenure would be 70 years. At the same time, if another individual buys the plan at 40 years of age, the tenure would be 60 years
The plan provides life cover to the life assured for up to 99 or 100 years of age ( depending on the Insurer), and the policy term depends on your entry age.
Who should consider investing in a Whole Life ULIP?
Individuals looking for whole life protection with long-term wealth creation can consider investing in a whole life ULIP.
Is a Whole Life ULIP suitable for long-term wealth creation?
Since whole life ULIPs have a long-term horizon, they are suitable for long-term wealth creation.
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