What is whole life insurance?

  • Covers you for lifetime
  • Policy has surrender / cash value
  • Pays the sum insured and any bonuses declared sum assured upon claim  
  • Premiums can be payable for a limited period of time or whole life

What is Whole life insurance?

 

Whole life insurance, as the term suggest, will cover the insured for whole life (usually till age 99 or till age 100) for Death and Terminal Illness. The plan can also be customized with optional riders such as early critical illness rider, critical illness rider and Total and Permanent disability rider to enhance the policy coverage.

 

Whole life insurance offers flexibility in premium payment by offering premium terms of 5/10/15/20/25/30 years or till age 99.

 

Premiums of a participating Whole life insurance plans will be pooled together and invested with premiums from other policyholders into the insurers Participating fund. The whole life insurance participates in the performance of the Participating fund in the form of bonus and dividend. Bonus and dividends are non-guaranteed and may vary according to the performance of the Participating Fund. That said, insurers will smooth bonuses to ensure stable medium to long term returns.

 

A salient feature of Whole life insurance is that it also accumulates cash value over the years and will have surrender value that comprises of guaranteed cash value and non-guaranteed bonuses. The policyholder will receive a separate payout if he/she chooses to surrender the plan in full or partially.

Why Whole life insurance?

 

As Whole life insurance provides life time coverage, it can be used as a form of legacy planning as your family will almost certainly receive the payout. It also removes the need to consider when you wish to have your coverage to end (unlike the case for Term insurance).

 

With the flexibility in premium term choices, you can select accordingly based on your lifestyle and financial ability. In additional, you do not have to worry about paying for policy premiums beyond your retirement years.

 

As whole life plans provide cash value, it gives the policyholder the option and flexibility to either partial/full surrender and receive a cash payout or to maintain their protection coverage during the golden years.

 

If you are keen to find out more, we compare the key features of each insurers’ whole life insurance plans.

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