Some individuals like the assurance that Whole of Life protection insurance policies can afford in providing cover for their Whole of Life until death. As it is inevitable that everyone will die at some point in their life, these policies can often be more expensive than standard term assurance, however they carry the benefit of knowing that you will always be insured.
Whole of Life policies are designed to provide life assurance for an individual’s whole life, rather than a specified term. They contain a savings component, the idea of which is to build up a fund in the early years which will subsidise the life assurance cost in later years. A fixed death benefit is paid to the beneficiary, this is either the sum assured or the value of the investment pot, whichever is the greater.
Premiums are usually fixed for the first ten years of the policy, and every five years thereafter, after which the policy is reviewed and the premiums or the sum assured may need to be amended depending upon investment returns. Management fees may also deplete a proportion of the premiums.
Whole of Life policies can be useful, for some people, to provide a proportion of protection against inheritance tax liabilities.
These policies can prove more complex than term assurance policies and therefore advice should be sought prior to inception of a policy.
Whole of Life insurance guarantees the payment of a lump sum on the death of the policyholder, providing premiums are maintained and full medical disclosure had been provided. Because death is inevitable, premiums for these policies can often prove more expensive than alternative options. Under Whole of Life cover, a proportion of your monthly premiums are invested by the provider in to life funds. This means that both your premiums and sum assured may change over the policy term.