You're probably aware of how cakes can be customized today. If your friend likes a particular TV show or movie, you can ask the baker to add a mini replica of their favorite character on the cake. If they enjoy shopping, you can have the baker include fondants of their favorite stores, brands, etc. Similarly, you can also customize a Whole Life Insurance Policy and design it to meet your specific requirements.
Let’s take a look at the various customization options available with a Whole Life Insurance Plan - in this article. First, let’s understand how the plan works, and why it is important to customize it.
What Is A Whole Life Insurance Plan?
A Whole Life Plan is a type of life insurance plan that covers you till the age of 99/100 years. It practically covers you for your entire lifetime and offers lifelong protection to your family members. It is a good option to consider if you want to leave a financial legacy for your family.
If you survive till the end of the policy duration, the insurance company will pay a maturity benefit, i.e., a fixed sum to you.
In case you pass away during the policy duration, your family will receive a death benefit, i.e. a fixed sum of money.
Some insurers also offer a survival benefit, i.e., a specific percentage of the sum assured, after you finish paying your premiums.
Why Is Customizing A Whole Life Insurance Policy Important?
A Whole Life Insurance Plan is one of the most important purchases you will make for yourself and your family. It is also a long-term commitment. Hence, it is crucial that it is customized to your as well as their needs and preferences.
Let’s look at the various customization options available with a Whole Life Plan.
Customization Options Available With A Whole Life Insurance Plan
Customizing The Premium Payment Frequency
You will have to make timely premium payments under your Whole Life Insurance Plan to keep it active. Insurance companies provide several options to customize how frequently you want to pay your premiums. Generally, there are 4 premium payment options available -
Annual Premium Payment Option
Under this option, you need to pay the premiums once a year.
Semi-Annual Premium Payment Option
Under this option, you need to pay the premiums once every 6 months - twice a year.
Quarterly Premium Payment Option
Under this option, you need to pay the premiums once every 3 months - 4 times a year.
Monthly Premium Payment Option
Under this option, you need to pay the premiums on a monthly basis - 12 times a year.
If you can afford to pay a large amount every year, you can select the annual premium payment option. Otherwise, you can choose the other options based on your convenience.
Regardless of the premium payment option you select, make sure you up auto-debit or standing instructions on your bank account. This will ensure that your premiums are transferred directly and on time to the insurer.
Customizing The Premium Payment Tenure
The premium payment tenure is the period for which you will have to make the premium payment under your Whole Life Insurance Plan.
With the Limited Pay option, you can pay off your premium payments in a limited number of years compared to the policy duration. You can speed up the premium payments under your policy and finish paying your premiums in faster and bigger installments.
There are different types of limited pay options available, like 5-pay, 10-pay, 12-pay, 15-pay, etc. If you choose the 10-pay limited pay option, you can finish your premium payments in 10 years. And, you can continue enjoying the policy coverage for the rest of the duration. You can choose a limited pay option that suits your needs the best.
Customizing The Policy With Riders
Riders are one of the simplest and most convenient customization options available with a Whole Life Insurance Plan. They provide additional protection against particular risks at a certain extra cost. For instance, a Waiver of Premium due to Critical Illness Rider will waive off all your remaining policy premiums if you are diagnosed with a critical disease listed in the policy document.
You can opt for riders without undergoing any additional medical tests or documentation - beyond the ones you undergo for your base policy. While the riders available with a Whole Life Plan will differ across insurers, below are the common types of riders available today -
- Critical Illness Rider
- Accidental Disability Rider
- Accidental Death Benefit Rider
- Waiver of Premium due to Accidental Disability Rider
- Waiver of Premium due to Critical Illness Rider
- Surgical Care Rider
- Hospital Care Rider
Customizing How Your Family Receives The Claim Amount
If you pass away during the tenure of your Whole Life Policy, the insurance company will pay the sum assured to your family. Insurance companies allow you to customize how you want your family to receive the claim amount.
Here are the 2 most common claim payout options available with a Whole Life Insurance Plan -
Lump Sum Payout Option
Here, the sum assured will be paid to your family in one go, as a lump sum amount. You can choose this option if you are confident that your family would be able to manage a large amount of money. This option can also be ideal if you have debts, loans, or financial liabilities that need to be settled. Your family can use the claim amount to repay the loans/liabilities and get the burden off their shoulders.
Monthly Income Payout Option
Here, the sum assured will be paid to your family in monthly installments for a set period of time. You can choose this option if your family is not financially savvy and would not be able to handle a large sum of money. This option can also be helpful if you think your family would need financial support to pay off regular expenses, like grocery bills, house rent, etc. in your absence.
So, these are some of the customization options available with a Whole Life Insurance Policy. With these options, you can design the policy exactly as per your and your family’s requirements. Before you go ahead, make sure the customization option you want to select is available with the Whole Life Insurance Plan and the insurance company you choose.