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30 Apr 2017

Life Insurance Advice
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Whole Life Insurance

Whole of Life Insurance Explained

Whole of Life Insurance cover is for the whole of your life. Unlike term insurance, which only pays out if you die during the policy term.

Whole of Life insurance always pays out, it is guaranteed that the policy will pay out upon your death.

Whole Life Insurance Pros and Cons

Pros

  • Whole of Life insurance always pays out in the end, so you'll always get some money.
  • It could be worth thinking about if you want to leave your family with a lump sum.
  • You can combine it with term insurance if you want to cover any specific debts.

Cons

  • Whole of life insurance is more expensive than term insurance.

Whole Life Insurance Explained

As the name suggests, 'Whole of Life insurance' provides life insurance cover for the whole of your life. The sum insured is paid to your dependents following your death.

Whole of Life insurance is more expensive because it is certain that the life company will eventually have to pay the sum insured. Monthly premiums are invested by the insurer into a life fund.

Two types of cover exist:

Maximum cover

  • The initial premiums and the sum insured are guaranteed not to increase for the first 10 years. After this initial period the plan is reviewed and if necessary the premiums may be increased.

Balanced cover

  • This cover aims to balance the level of life insurance with adequate investment to support the cover in later years and 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. Increased charges or poor performance of the fund could result in the premiums being inadequate and may have to be increased to maintain the same level of cover.
  • Premiums will depend on the sum to be insured, your age, health and whether you have smoked or used nicotine replacement products in the last 12 months.
  • Additional options and areas for consideration include:
  • Life Fund Historic Performance: Check the historic performance of the insurance company's life funds. Poor previous performance could indicate a greater likelihood that future performance may also be poor, meaning monthly premiums may have to increase in order to maintain the same level of life cover.
  • Investment Growth Rate Required: For balanced cover check the investment growth rate used to calculate your premiums. The lower this rate the better as this rate defines the minimum growth rate required by the investment in order to maintain premiums at the same level.
  • Critical Illness: a lump sum is paid in the event of diagnosis of certain critical illnesses. You can save money by combining term insurance with critical illness cover. However, depending on the policy type, this may provide a single payout should death follow a critical illness diagnosis, rather than two payout's if cover is obtained separately.
  • Waiver of Premium: if illness prevents you from working your monthly premiums are paid on your behalf for after a set deferment period. Check the quotes Key Facts documents for each quotation produced.
  • Trusts: can the policy be set up in a trust? This can avoid delays in money going to dependents and can avoid the risk of having to pay inheritance tax.

The terms and conditions of Whole of Life Insurance policies vary, so make sure you understand the scope of the cover being offered before committing yourself.

We are not authorized to give advice on whole of life insurance and will refer all request for advice to an authorized financial advisor to assist you.

Do you want advice on whole of life insurance ?

After looking through the Whole of life insurance information if you would like Whole of Life Insurance Advice , complete our life insurance enquiry form and we will contact you to discuses your whole of life insurance and protection needs

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Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600