Also known as ‘life assurance’, this type of policy is a permanent life insurance which covers your whole life. As long as you pay the premiums, it is guaranteed to pay out to your beneficiaries when you die. This is different from term life insurance, which only pays out if you die during the set term the policy runs for. Whole of life insurance is more expensive than other types because insurance providers know there will always be a payout at some point. It is often used to help family members cover the costs of funerals as well as to leave them with a lump sum to cover inheritance tax.

Should I Consider Whole of Life insurance?

When considering whole of life insurance, you must make sure that you can afford the premiums, not only during your working life but also when you retire. If you can’t keep up with your premium payments, the cover will be cancelled with no benefit payable.

The good news is that some whole of life policies only require you to pay premiums up to a certain age, typically to age 90, however this does vary between different insurers, individual policies and levels of cover.

 

How much Do I pay for Whole of Life insurance?

Like other types of life insurance, the price of your premiums can be affected by various factors:

• The cover amount
• The amount you would like your beneficiaries to receive will be a major factor in the amount you pay per month
• Your Age
• The younger you are when you start the policy the cheaper the monthly premiums will be. This is typical among most insurance policies
• Health conditions
• Any existing health conditions will also affect your monthly premiums
• Medical history
• As well as your own medical history many insures will also take into account your family medical history
• A range of other lifestyle factors

Benefits of Whole of Life Insurance

One of the main benefits of whole-of-life insurance is that it can help your family deal with any bills associated with inheritance tax. Currently, if an estate is valued at more than £325,000, the portion of your estate above this will be liable for tax at the current 40% inheritance tax rate.

As a result, many families are forced to take out loans just to cover this bill, which may be particularly stressful. A whole of life insurance policy could help avoid this issue. By placing your whole of life policy into trust you can keep it separate from the rest of your estate and there is no inheritance tax liable. This will be paid out directly by the insurer to your beneficiaries who can use the lump sum to cover costs.

Whole of life cover may also appeal if you are determined to leave some form of inheritance to your loved ones, or if you want to help with your funeral costs.

If you would like an adviser to review your existing cover and benefits or would like to discuss Whole of life Insurance in more detail, please get in contact.