What is whole-of-life assurance?
Whole-of-life insurance will pay a tax-free lump sum to your loved ones in the event of your death. This type of life insurance guarantees a pay-out, because it covers you for life, so quotes are often more expensive than level term insurance premiums.
Higher Cost
Whole of Life assurance is more expensive than level term insurance because a claim is inevitable. There is a guaranteed pay out, even if you live until you are 150 years old, your family will be paid. We can compare prices on your behalf and ensure you can meet the cost.
N.B. With Whole of Life Policies, you could still be paying the premiums into your 70s and 80s ! (although most policies are structured so that premiums need no longer be paid beyond a certain age, such as 85 or 90, depending on the provider).
Level Term Insurance is the most popular policy as it pays out a regular income or lump sum if you die within the policy term. It is not a guaranteed pay out and therefore the levels of protection are larger than Whole of Life.
Terms and Conditions
With all policies, it is vitally important to read the small print carefully as whole-of-life insurance comes in a variety of shapes and sizes. So if you don’t fully understand the term and conditions, you could be in for a shock. Quote Easy’s personable service provides the customer with access to a team of FCA Regulated Advisors, who can explain to the customer, simply and clearly, the terms and conditions of any policy you choose with us.
Fixed premiums
Many whole-of-life plans charge fixed premiums for a fixed amount of cover. In other words, you know how much the policy costs each month and the amount it will pay out if the worst was to happen. A number of plans also charge fixed premiums up to a certain age, perhaps 65 or 70.
The cover then continues but you no longer have to pay, which can be really useful if you have already retired and you don’t have so much disposable income.
Investment linked
Most whole-of-life plans are linked to an investment fund, which means the premiums and the sum assured are typically fixed for 10 years, but are then regularly reviewed. If the investments are not performing well, the insurance company can either put up the premiums or reduce the sum assured.
You could therefore end up with life insurance that is either unaffordable or inadequate.
Who needs it?
Whole-of-life cover does not suit everybody. You might, for example, have no need for life insurance in your 80s as you will probably have no mortgage or dependent children.
However, some people like to provide an inheritance for their loved ones, if only to cover their funeral costs. Many people also choose to take out whole of life insurance in order to meet a future inheritance tax bill.
Writing a policy ‘in trust’
The proceeds of whole of life insurance do not usually attract income or capital gains tax, but your family could be liable for inheritance tax on the payout. You should therefore make sure that you write the policy ‘in trust’. The money will then go into the trust and will not form part of your estate when you die, so sidestepping any potential inheritance tax liability.