Whole of life insurance
A whole of life insurance policy pays your family a lump sum of money whenever you die to help ease their financial worries. Unlike a term life insurance policy that covers you for a fixed period, a whole of life insurance policy covers you until you die i.e. for your whole life.
A whole of life insurance policy is the most comprehensive life cover policy available and can be bought for many reasons including:
- To provide financial security should you pass away unexpectedly
- Pay off outstanding mortgage repayments and secure you family home
- Assist with the cost of raising your children and pay school and university fees
- Help pay funeral costs relieving your family of worry
How does whole of life insurance work?
A whole of life insurance policy works by paying your family a fixed amount of money when you pass away. Monthly premiums can be reviewable and as you get older or suffer ill health you may experience an increase in premium to reflect these changes.
Your monthly premiums will usually be fixed for the first ten years of the policy but after this time they can be reviewed and it is important you are aware that premiums may increase.
As a whole of life policy is guaranteed to pay out it is often referred to as life assurance and unlike some term life policies, there is more flexibility with whole of life insurance.
Why would I need whole of life insurance?
A whole of life insurance policy can provide that financial security for your family when you pass away. As death is inevitable, a whole of life insurance policy is guaranteed to pay out when you die, as long as you continue to pay your monthly premiums.
For some, this level of life insurance is what they require and a whole of life insurance policy can be used to help cover inheritance tax, funeral costs and can secure your partner and family’s financial future.
Inheritance tax is currently set at 40% of the value of your estate, with the first £325,000 incurring no inheritance tax. It could prove more profitable for your family to have a life insurance policy that can be used to pay any inheritance tax especially if your policy is written in trust.
How much does whole of life insurance cost?
As a whole of life insurance policy is the most comprehensive form of life cover, the cost of it can be more than a fixed term life insurance policy. There are many factors that will affect the cost of your policy and these can include:
- The amount you want pay out when you die
- Your current age
- Your health including medical history
- Whether you smoke or not
- Flexibility of the policy
- The number of people on the policy
It is important you provide accurate information to your insurance provider as any inaccuracies could invalidate your policy.