Whole life insurance keeps you covered for most of your life, often up to age 100, and some plans also pay a yearly income. Learn how it works and who it suits.
Most life insurance policies cover you for a fixed number of years, such as 15, 20 or 25. A whole life policy is different: it covers you for your whole life, or up to a very high age such as 100. That means your family is almost certain to receive a payout one day, whenever it is needed.
How whole life insurance works
In a typical whole life plan:
- You pay premiums for a limited period, for example 15 or 20 years, or in some plans for a shorter or longer period.
- Your life cover continues long after you stop paying premiums.
- If you die while the policy is in force, your nominee receives the death benefit.
- In plans with a maturity age (such as 100 years), you receive a maturity amount if you live that long.
Many modern whole life plans also include a survival benefit: a regular yearly income that starts after a certain point and continues while you are alive and the policy is in force. Some plans are participating (they earn bonuses, which are not fixed in advance), while others are non-participating with benefits fixed in the policy document.
Why would someone want cover up to age 100?
A term plan usually ends at around 60 to 75 years of age. After that, you have no cover. A whole life plan fills this gap. People choose it for three main reasons:
- Leaving a legacy. You want your children or spouse to receive a fixed amount after you, no matter at what age you pass away.
- Regular income in later years. Plans with a yearly survival benefit can act as an extra source of income after retirement.
- Peace of mind. The cover does not "run out" just when you are older and may find it harder to get new insurance.
A simple example
Illustration only, not a quote.
Sunita, aged 35, buys a whole life plan with a Basic Sum Assured of ₹5,00,000 and pays premiums for 15 years.
- After she finishes paying premiums at age 50, the plan starts paying her a yearly income, which is a fixed percentage of the sum assured as stated in that plan's terms.
- This income continues every year while she is alive and the policy remains in force.
- When she passes away, at whatever age, her nominee receives the death benefit as defined in the policy (plus bonuses in a participating plan).
- If she lives to the plan's maturity age, she receives the maturity amount herself.
The exact income percentage, death benefit and premium depend on the plan and the options chosen.
Legacy planning made simple
For many families, the biggest value of whole life insurance is planned inheritance. Property can be divided and may cause disputes, but a life insurance payout goes directly to the nominee you choose. This makes it a clean, simple way to leave money for:
- a spouse who may outlive you
- a child with special needs who will need support for many years
- grandchildren's education
- paying off any debts so they do not fall on your family
Remember to keep your nominee details up to date.
Things to keep in mind
| Point | What it means for you |
|---|---|
| Higher premium than term | Because a payout is almost certain, premiums are higher than pure term cover |
| Long commitment | You must pay premiums for the full premium paying term to get full benefits |
| Survival income | Usually starts only after premiums end or after a set year |
| Bonuses (if participating) | Declared by LIC year by year, never promised in advance |
| Tax | Depends on prevailing tax laws and the tax regime you choose |
If your main need is just high cover at low cost for your working years, term insurance may suit you better. Many people combine the two.
Which LIC plans are of this type?
Examples include LIC's Jeevan Umang (745), a participating plan with cover up to age 100 and a yearly survival benefit after the premium paying term, and LIC's Jeevan Utsav (771), a non-participating whole life plan with a fixed yearly income once income starts. Browse all options on our whole life plans page, and check how much cover you need with the life cover calculator.
Curious what a whole life plan would cost for your age? Get a premium estimate or contact us.