If you are planning to leave a legacy behind for your children, then choose a whole life insurance policy. Let’s check how whole life insurance is a better legacy option than any other asset.
Traditionally, people consider keeping the property as a heritage and a way to secure the future of the dependants, but real estate is an illiquid investment. Keeping a property as legacy would not bring complete financial security when your dependents need liquid money.
Investing in equities also had its uncertainties as the returns depend upon the company’s performance, government policies, ability to take risks, economic fluctuations, etc. An equity fund is a more suited option for those who can take risks and not risk-averse. Thus, to have a more stable, secured and assured legacy is to choose a whole life insurance plans. Here is how whole life insurance is a better legacy to leave than equities or reals estate.
What Is a Whole Life Insurance Policy?
A whole life insurance policy provides life coverage to the insurer until the death, and the decided maturity amount is given to the nominee. The maturity period of the whole life insurance policy is 100 years, and the policy remains in force until the insurer pays the premium.
Working of Whole Life Insurance Policy
Unlike other insurance plans, whole life insurance comes with maturity benefits along with death benefit. So, the life assured is covered till the death and gets the maturity benefit.
Benefits of Whole Life Policy
Life Coverage: A whole life plan comes with coverage for the entire life until 100 years of age.
Coverage Assurance: The whole life plan assures to pay the lump sum to the dependant after the death of the primary bread earner, thereby taking complete care of the finances of the family.
Payments in a periodic way: On maturity, the insured receives the lump sum along with the premiums and the bonuses acquired in the endowment plans. As an alternative method, one can get the entire premium payment in a lump sum and the sum assured is paid periodically till the insured survives or completion of policy.
Tax benefits: The premium and the pay out both are tax-deductible under Section 80 C and Section 10 D respectively under the Income Tax Act.
Availability of Loan on Whole life plan: With a whole life insurance plan, one can opt for a loan against the policy. As the plan has lifetime coverage and the assured value keeps increasing with time, it is a better option than any other mortgage loan.
Whole life insurance plans are the best way to help your dependents financially. This also serves as a good retirement plan for married couples. If the insured spouse dies, the benefit is passed to the surviving spouse. Moreover, it will be passed as a bequest to the children and heirs. It also serves as a source for liquid money in times of emergency as the beneficiary receives a bulk amount.