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Whole of Life Insurance - Whats is it all about ?

Whole Life Insurance Summary

• Designed to pay out on death - whenever it occurs
• Benefits are currently paid out tax free on claim
• Whole Life Assurance Cover may be level or inflation linked 
• Medical evidence may be required and a medical examination for those with health issues
• Premiums may be guaranteed or if investment based reviewable
• Maybe payable on death or earlier Terminal Illness
• Benefits can be set up to be payable into Trust
• Can be set up on sole or joint life basis

Whole Life Insurance - A protection cover plan that via definition as the name implies, is insurance guaranteed for the whole of your life, whenever you die. Whole Life Cover is traditionally more popular with those looking for over 50's life cover. Term insurance, which only pays out if you die during the policy term, is traditionally more popular for those looking for family protection whilst the children are still dependant or mortgage decreasing term protection.

Whole Life insurance policies are designed to always pays out upon your death so logically are more expensive than term insurance as the risk is greater to the whole life insurance companies. Whole of Life insurance is more expensive because it is certain that the life company will eventually have to pay the life sum insured.

2 types of Whole Life Insurance cover plans ~ Guaranteed premiums v Investment

Whole Life Insurance - Guaranteed Non-Profit Premiums

This type of whole of life insurance policy as the name implies has guaranteed or non reviewable premiums that stay the same throughout the plan & has no surrender value. It can be set up on a single or joint life basis. The cover can be level or also index linked. 

Whole of Life Assurance - Uk premiums will depend on the following: sum to be insured, your age, your health, your sex and whether you smoke or not. A non smoker is usually defined as someone who has not smoked for at least 12 months or taken nictotine replacement products. Premiums for women are generally lower as on average they tend to live longer.

Check the quotes & Key Facts documents for each whole life quotation produced.

Whole Life Assurance - Investment Based

Your whole of life premiums are invested into a fund to cover the cost of whole life insurance rates. Potentially if surrendered this plan may aquire a value.

Balanced cover
This type of cover aims to balance the level of life cover with adequate investment to support the protection in later years and thus try maintain the original premium throughout life. This relies on the value of units invested in the underlying fund growing at a certain level each year. Poor fund performance or Increased fund charges could result in the premiums being inadequate and may have to be increased to maintain the same level of cover at review.

Maximum cover
The initial premiums and the sum insured are designed not to increase for the first 10 years. After this initial period the plan is reviewed and if necessary the whole life plan premiums may be increased.

Trusts: Should my Whole Life Cover policy be set up in a trust?

Trusts can help avoid delays in money going to dependents but should not displace the importance of making a will. However, it can potentially avoid the risk of having to pay inheritance tax [whose rules change with each successive government]. The terms and conditions of Whole of Life Insurance policies trusts vary, so make sure you understand the scope of the trust being offered before committing yourself & seeking independant legal advice if necessary.

Do you want Advice on Whole of Life Insurance?

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