Don’t use credit cards like this!
Do you pay only the minimum amount due on your credit card? How can your debt burden increase just by paying the minimum amount due? Watch this video to know
Life insurance is a critical part of financial planning. It provides financial support so that your children can live their dreams even when you are not around. While most life insurance policies have a tenure of 10-30 years, some plans provide you lifelong coverage. These plans are known as whole life insurance. Here is a primer on whole life insurance plans:
What is a whole life policy?
Whole life insurance provides lifelong cover. It is an insurance policy that covers you for 100 years against regular policies with a defined term of say 10, 20 or 30 years. The policy helps you in estate planning as it helps you leave behind a legacy for your family. Suppose the policyholder person dies before the completion of the term of the policy, then the beneficiaries get the sum assured. The claim amount under the insurance policy is exempted from tax under Section 10(10)(D) of the Income Tax Act.
Who should buy a whole life policy?
Special needs kid: A special needs kid has far more extensive requirements as they need regular care including check-ups, therapies among other things. Therefore, parents need insurance cover that can support kids even when they are no more. If you have financial dependents who would stay dependent on you for a relatively long time, possibly for your entire life, you should buy a whole life policy to secure their future.
Inheritance: If you want to leave a tax-free legacy for your children in addition to your existing assets, the whole life is a good alternative. Experts say you can also consider allocating existing assets for one heir and provide whole life plan benefits to the other.
Loan option
A policyholder can also take a loan against the whole life policy. The loan is provided against the surrender value of the policy. As these are very long-term plans surrender value of the policy increases over time. But remember you can borrow only a certain percentage of the surrender value and not the whole amount.
Whole life plans offer coverage for the policyholder’s lifetime, making them one of the practical tools for estate planning.