Understanding the Policy

A guaranteed payout after your death is the best feature you could ask for.

The whole life insurance policy also called the cash value life insurance is a permanent life insurance policy that includes the savings component called the ‘cash value’. It is like investing as well as saving for your future. This policy extends until the entire lifetime of an individual and the interest rate on the cash value is fixed by the policy provider.

Policy Highlights


  • Includes the saving components called cash value
  • Death benefit
  • Lasts for the whole life
  • Recommended for people with life-long dependencies


  • At least 5 to 15 times more expensive than term life insurance
  • Withdrawing early would result in penalties and administrative charges which eat away your earnings and the cash value you receive is quite less.
  • Although there is not much risk involved, however, for investment and savings purposes other options may be considered


  • Lifetime
  • As long as you keep paying a premium

We advise you to seek expert guidance on whether or which Whole Life Insurance Policy would suit your needs.

Understanding the Cash value

Cash value is the tax-deferred part of the payment that you pay along with the monthly or annual premium. This part is a kind of saving component which earns interest like an investment on your part. The growth however is very small and is most likely to happen over two or three decades.

  • Withdraw your cash value earlier: You may withdraw your money from the cash value of your policy in case you surrender the whole life insurance policy. The money you withdraw will then be taxed as your income and will not remain tax0free anymore.
  • Borrow loan against your policy: You may borrow a loan from the cash value of your policy which incurs a low-interest rate however, it has to be paid back or else it keeps growing. If you die before paying back your loan, the amount will be deducted from the death benefit.
  • Collect cash value by surrendering your policy: In this case, it is advised to surrender a policy after 20 or 30 years otherwise deducting the fee for surrendering the policy, the amount you receive will not be much more than the premiums you paid.
  • Cash value is not paid with the death benefit: Cash value can only be used by the policyholder during his lifetime and in case one dies, the beneficiaries only receive the death benefit and the insurance companies retain the cash value amount.
  • Cash value only grows over time: Cash value has nothing to do with the stock market or any other financial trend. It only grows over time. So the risk is minimal.

Cost of Whole Life Insurance

Since there is a guaranteed payout at the end of one’s life, the whole life insurance is much more expensive.

  • 5 to 15 times more expensive than other life insurance policies
  • The cost depends upon the term of the insurance policy and the cash value amount.

People with higher income groups may find Whole life insurance beneficial, however, it has been observed that around 45% of holders surrender this policy within the ten years of buying.