Do's and Don'ts While Buying a Whole Life Insurance Policy

Whole life insurance is a long-term financial protection tool that provides lifelong coverage, guaranteed benefits, and in many cases, cash value accumulation.

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DO's (Important Steps You MUST Take)

Since it is a long-term commitment, careful evaluation is essential before purchasing such a policy.

1. Understand the Purpose of a Whole Life Policy

Whole life insurance is ideal if you want:

• Lifetime coverage (till age 99 or 100 depending on insurer)

• Wealth transfer or estate planning

• A guaranteed legacy for dependents

• Long-term cash value buildup

• Stable, predictable returns

• Make sure your financial goals align with these features.

2. Assess Your Long-Term Affordability

• Premiums for whole life plans are higher than term insurance.

• Ensure you can comfortably pay premiums for 15–20+ years (or for policy tenure if limited pay is not opted).

• Missing premiums can lead to policy lapse and loss of benefits.

3. Compare Plans Across Insurers

Check differences in:

• Premium structure

• Guaranteed additions/bonuses

• Cash value accumulation

• Riders & additional benefits

• Surrender value

• Paid-up value options

A comparison helps optimize both cost and benefits.

4. Review the Policy's Cash Value Component

Whole life plans accumulate a cash value, which grows with:

• Guaranteed additions

• Reversionary bonuses

• Loyalty additions (in participating plans)

Understand how these accumulate and when you can access them.

5. Opt for Riders Based on Your Needs

Enhance coverage with:

• Critical illness rider

• Accidental death benefit

• Waiver of premium rider