Life Insurance Corporation of India recently launched 'Jeevan Umang', a plan that offers cover up to the age of 100. The policy offers annual survival benefits from the end of the premium-paying term till the age of 99, and a lumpsum payment at the time of maturity, or on the policyholder's death.

The product, which covers life up to 100 years, is called a whole-life product. ET digs deep into whole-life products and finds out who should buy it.

How does a whole-life policy work?
A whole-life plan is a life insurance policy that remains throughout the lifetime of the insured. Some companies have launched whole-life policies that offer maturity and death benefit under such a policy. The advantages are fixed costs and low premium payments.

LIC's product offers maturity benefit after 40 years from the date of commencement of the policy, provided the insured becomes 80.

Who can buy it?
Though different companies have different age limits of buying this policy, LIC's Jeevan Umang can be bought by anyone between 90 days and 55 years. Though the maturity age is 100 years, companies have launched products with 80 years maturity.

If the insured lives past the maturity age, the policy will become a matured endowment. The insured will get the benefit as maturity benefit in any money back or endowment plan.

What is the return?
Return varies depnding on insurers.

LIC's product offers survival benefits equal to 8% of basic sum assured and paid-up sum assured, respectively. The policy pays first survival benefit at the end of the premium-paying term and thereafter on completion of each subsequent year till the life assured survives, or till the policy anniversary prior to the date of maturity.

There's no upper limit to the basic sum assured, but it has to be in multiples of Rs 25,000, with premium paying term options of 15, 20, 25 and 30 years. Income tax benefit is available provided all premiums have been paid.
What if a premium is discontinued?
If the payment of premium is discontin ued after three years, a paid-up policy for reduced sum assured is secured.However, these reduced paid-up policies are not entitled to participate in the bonus declared thereafter.

But the bonuses already declared on the policy will remain attached, provided the policy is converted into a paid-up policy after the premiums are paid for five years.