Why High Net-Worth Individuals may prefer Whole Life Insurance Policies

Buying an online life insurance policy has become easier these days, with several options available for customers. The benefits of life insurance are vast and wide-ranging, including financial security for your family members in the event of your absence. At the same time, there are several other kinds of policies in this segment which help you combine both insurance and investments to perfection. One of them is whole life insurance. 


To understand the rationale behind whole life insurance, let us first look into the concept of permanent life insurance. Permanent life insurance can be defined as a coverage plan that covers the policyholder for their entire life and encompasses a death benefit plan with a savings component, as opposed to term life insurance that has a pre-defined tenure and no maturity benefits. There are four distinct kinds of permanent life insurance- variable life, variable universal life, universal life, and whole life. High net-worth individuals are more likely to turn to whole-life insurance plans based on several factors. So here’s looking at the same after learning a little more about whole life insurance plans. 


A Brief Guide to Whole Life Insurance Plans

Whole life insurance is a specific kind of permanent life insurance in which the insured policyholders are covered for their lifetime, given that their premiums are paid in a timely manner. The policy usually covers a person till 99 years of age. This offers long-term protection for your family. You can purchase an online life insurance policy in the whole life category if you are interested in long-term coverage. 


Even in their old age, many people have dependents in their families, and a policy like this can care for those responsibilities. Moreover, over the duration of the policy’s term, your premiums are fixed, giving you the advantage of a sum that won’t gradually drain your finances. 


You can plan your spending accordingly because you are assured of the premium amount. The maturity money is exempt from tax subject to Section 10(10D), and the insurance premiums paid by the policyholders are eligible for deductions of up to ₹ 1.5 lakh under Section 80C. Now that we know the benefits of life insurance that covers you for life let us see why high-net-worth individuals may prefer whole-life insurance plans in the current scenario. 


Why are High Net Worth Individuals more likely to turn to Whole Life Insurance Plans?

If you have an investible surplus and wish to put the money into a secure investment, you should give whole life insurance plans some serious thought. Transferring money to the next generation will be very tax-efficient in this case. Let us see why HNWIs (high net-worth individuals) find whole life insurance plans attractive-

  • After retiring from an active working life, high net-worth individuals (HNIs) do not typically face significant difficulties covering their basic living needs. Hence, they do not need to rely too much on maturity claim amounts. They have the ability to maintain full life insurance coverage. Middle-class Indians who can use a contractual savings plan to save a tax-efficient savings corpus are best served by endowment-type plans.
  • HNIs shouldn’t bother about paying taxes on the number of maturity claims if they live a long enough life to obtain the policy money when it matures. One must earn significantly more money each year if they are paying Rs. 5 lakhs in annual taxes. So, it is unlikely that this taxation will have a significant impact on the wealthy.
  • High-income citizens who have exhausted all other tax-deferred savings options may want to think about a whole life insurance plan or other long-term plans with an accumulating cash value. You can shield your money from the swings of the stock market with certain cash value accounts. While the returns from traditional investing accounts are typically more significant, some returns on cash value are more predictable.
  • A legacy for your family might be made possible with the aid of whole-life insurance. This is because whole life insurance policies provide coverage up to the age of 99. The beneficiaries of the insured person will receive the sum assured if they pass away before this age.  
  • Whole life insurance makes sense for many wealthy people since it can offer a death benefit to their loved ones and heirs that is typically tax-free. Also, this money can be used for paying inheritance or estate taxes, preventing the need to sell off other estate assets to pay for the same. 


Hence, HNIs are more likely to search for whole life insurance plans when buying an online life insurance policy. Even though life insurance isn’t just for the wealthy, there are a number of unique reasons why affluent people would think about getting the same. Many people base their decisions only on premiums, comparing the price of whole life insurance to that of other policies. Yet, they overlook whole life insurance’s secret advantage, which is its capacity to facilitate the inexpensive creation of an inheritance for your family. There are many plans that can benefit someone with a significantly high net worth. Still, a whole life insurance plan can offer long-term benefits, making it rather attractive for this category of people. 

Leave a Comment