What is whole of life insurance and how does it work?
Whole of Life Insurance is a policy where you’re guaranteed a pay-out from the insurer whenever you pass away, because the policy has no expiration date. As long as you pay your monthly premiums. You can relax knowing that there is enough money aside to cover whatever you may leave undone.
Why should I choose Whole of Life Insurance?
Because Whole of Life Insurance has no expiration date, you’re guaranteed a pay-out. This might be suitable if you want to make sure you’re covered no matter what.
Whole of Life cover can be expensive when compared to level term or mortgage protection life insurance because a claim is inevitable.
Whole of Life policies can be taken out by anyone at any age. However if you’re older with no mortgage and no dependants. You could use whole of life to leave an inheritance or to cover the costs of your funeral.
What are the benefits?
The guaranteed pay-out you’ll receive is a definite benefit for a whole of life policy. As well as the peace of mind you’ll receive knowing that your family will receive a lump sum when you die.
Are there any considerations with a policy?
It’s important that you spend the time fully understanding the terms and conditions laid out in a whole of life policy. So there are no nasty surprises or shocks down the line. Whole of life insurance can have different terms and conditions based on the insurer offering the policy.
Because of the inevitable claim on the policy. Whole of life cover is also more expensive than other life insurance options. Make sure you can afford the premiums – you could be paying late into your life. So budgeting this properly is recommended. Most insurers offer policies where you will pay up until 85-90 years of age. After then you are no longer required to pay as you’re then covered.
Is it a good investment?
As with any insurance plan. there are many reasons for choosing to commit to a whole of life cover policy.
People mainly invest in this type of insurance plan to help pay towards funeral costs. Which many don’t think about saving for. Funerals can cost as much as around £4,000, if not more. Depending on the needs and personal preferences of you and your loved ones.
Many opt for Whole of Life insurance because they want to have protection in place for future inheritance tax planning. When someone passes away, inheritance tax is placed on the deceased’s estate and must be paid off. The estate consists of your property, money and possessions. For those whose estate amounts to over £325,000, then inheritance tax is incurred. If you are planning to leave a large estate behind. You may want to take out a Whole of Life policy to help cover this bill. This way, your loved ones would be able to receive everything you have left behind. Without having to sell anything or take money from their own pocket.
Another reason for taking out whole life cover is that a policyholder may want security if they have a child with a disability. If and when death occurs. This policy would leave their offspring with some financial benefit in getting care once the parent(s) is/are no longer here.
Although it works out more expensive than other insurance cover plans. It should be seen as a form of investment, as it ensures a legacy to be left for your family and for situations like these.
Which is better whole of life or over 50’s?
When you are over 50, you could look into an over 50s life cover policy. Which is similar to the whole of life plan, but requires no medical checks. Although this could be less time-consuming. It usually works out that the pay-out isn’t as much as what your loved ones would receive with the Whole of Life policy. There is also a 2-year deferment period meaning that if you die within this time frame, a lump sum will not be paid out.
However, there are 2 benefits of over 50s cover in the first 2 years. Firstly, 150% of your premiums would be reimbursed if death did occur during this period. Also, if you died as a result of an accident, it would pay out three times your cover.
Another advantage of this policy is that you would only pay premiums up until the age of 90. But after this, the cover would continue even though you are no longer paying towards it.
The major reason people invest in over 50s insurance is to help loved ones cover any funeral costs when they pass away. If they haven’t already started saving towards it. The plan is also aimed at people whose medical issues might stop them from getting a normal whole of life policy.
If you are not yet 50, then you might want to consider whole of life as it may be more worthwhile for you.
Our specialist advisors will be able to help you with the difficult choices. Providing impartial advice, so complete our enquiry form and speak to one of our advisors today. For a free, no-obligation quotation.
Which is better?
Term life insurance can be indexed alongside your debt repayments like a mortgage so that the assured sum matches your outstanding debt. Term life will only pay out in the event of your death if you pass way within the terms of the policy. If you outlive those terms then you will not receive a pay-out.
Whole of life insurance covers you for the whole of your life. So you know your family will get a pay-out not matter what as there are no set terms.
This means that the life insurance company is guaranteed to pay-out to your beneficiaries at some point so premiums are typically more expensive. However, if it isn’t paying off debt that you are worried about. You may want to leave money in trust or a lump sum to your family. The whole of life would better suit your needs. Speak to one of our advisors to be sure you are buying into an insurance product that gives you the cover that you want.
Typically, protection plans have no cash-in value and cover will cease if premiums are not maintained. However some whole of life plans have a ‘surrender value’ where a small amount of the cover paid may be returned to you. You will need to check with the insurer to see if this is an option they provide.
How do I get Insurance?
Taking out a Whole of Life policy with Life Insurance Cover couldn’t be easier. Simply complete our enquiry form and our specialist advisors will be able to help you with the next steps. Offering you the protection for you and your family.