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Permanent Life Insurance - A Life Insurance that doesn't expire

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September 01, 2022

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A life insurance plan is specifically designed as a protection plan where, in the event of your death it financially protects your loved one. If you are looking for life insurance, you have two main options - one is term life insurance and the second is permanent life insurance. Term Life Insurance will last for a specified period of time, while Permanent Life Insurance gives you coverage throughout your lifetime. It not only guarantees lifelong protection but also comes with a cash value component.

Permanent life insurance is comparatively more expensive than a term insurance plan. While it may be a little complicated to understand, in some cases it is advisable to invest in a Permanent Life Insurance policy. Here’s what you need to know before you decide and make an informed decision.

What is a Permanent Life Insurance policy?

A permanent life insurance policy, as the name suggests, will last as long as you live. Unlike term insurance, Permanent Life Insurance policy does not expire as long as you keep paying the premium on time. Here, the death benefits are paid regardless of when the policy holder dies and it guarantees a way to leave behind financial support for your loved ones.

Permanent Life Insurance also includes a savings account that helps you build ‘cash value’ over time which may help you meet your financial needs and goals during your lifetime. You can also use the cash value to help fund your retirement.

Is Permanent Life Insurance policy right for you?

When considering a Permanent Life Insurance,there are a few factors to take into account including your longevity, the cost and flexibility. This type of insurance is a good fit for those:

  • Who need coverage irrespective of when they die

  • Who want to use their life insurance as a way to leave money to a loved one or take care of their dependents’ financial needs

  • Who would like to take advantage of the policy’s cash value component

Whole Life Term plan vs. Whole Life Insurance: What’s the Difference?

A Whole Life Term plan, as the name suggests, is for a certain term which means for a set number of years and Whole Life Insurance is for a whole lifetime which means your entire life. While both are popular, you can choose the one that suits and aligns with your financial goals. Here are some of the differentiators between the two:

Feature

Whole Life Term Plan

Whole Life Insurance

Definition

This is exactly what the name implies, it is a policy that will provide you with coverage for a specific time or a period

It is a simple form of permanent life insurance, it provides you with a coverage that will last your entire life as long as you live but your premiums have to be paid on time

Premium

The premiums are low but may increase over time.

The premiums are higher than the Whole Life Term plan but guaranteed to remain the same.

Coverage

It does not provide permanent coverage

It provides a permanent coverage

Length of coverage

Typically between 10 to 30 years

 

Lifetime (as long as premiums are paid)

Cash value

There is no cash value component, it is designed to give payout or death benefits when the policyholder passes away during the term of policy.

It includes a cash value component that allows you to withdraw it in future when the need arises while you are still alive.

Death Benefits

Yes

Yes

Maturity Benefits

No

It offers protection of 100 years or as long as you live but also offers maturity benefits as applicable.

Investment goal

If you are looking for long-term insurance plus investment.

If you are looking for short-term insurance along with permanent coverage

How Does Permanent Life Insurance Work?

One of the most popular Permanent Life Insurance offered by HDFC life is a Whole Life Insurance plan called Sampoorn Samridhi Plus. Here is how it works:

  • The first step is to choose the policy and ensure it covers up to 100 years of age or till the policyholder’s death, so if you are 31 years old today, you have to ensure it covers you for the next 69 years or till your death.

  • There are also in-built death benefits for accidental death.

  • Next you choose the premium payment term. With Sampoorn Samridhi Plus, you can get an option of limited premium payment where you pay the premium for a limited period however your coverage continues for a longer period.

  • There are 2 plan options to choose from - one is a simple Endowment plan and the other is an Endowment plan with Whole Life coverage, both providing Maturity and Death Benefits.

  • There is also a Simple reversionary bonus, Terminal Bonus and Interim Bonus payable with the sum assured that will help you increase the value of your corpus.

  • The claims received are exempted from tax deductions under section 10(10D)* and 80C of Income Tax Act**.

  • The insurance holder is also allowed to surrender the policy after 2 years of full premium payment.

  • You can also avail a loan against the plan after it has acquired a Surrender Value.

While there is no one-size-fits-all solution, you need to weigh out your options and zero in on a plan that fits into your overall financial goals. 

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Disclaimer

* Subject to conditions specified u/s 10(10D) of the Income tax Act, 1961

**As per Income Tax Act, 1961. Tax benefits are subject to changes in tax laws.

HDFC Life Sampoorn Samridhi Plus (UIN:101N102V05, Form No.: 501) is a Non-Linked, Participating, Life Insurance Plan. Life Insurance Coverage is available in this product. Please know the associated risk and applicable charges from your insurance agent or the intermediary or policy document of the insurer.

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