Whole of Life Insurance

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Things To Consider About Whole of Life Cover

Whole-of-Life Insurance can payout a lump sum when you die, depending on how it was set up. The size of the payout again depends on how your policy was set up. With some insurers, you can stop paying once you reach a certain age, but with others you have to make monthly or annual payments right up until you die. A policy can be set up in a trust and payment can be made to the trustees to distribute to the beneficiaries of that trust.

What Is Whole Life Insurance?

As the name implies, Whole of Life Insurance is a form of assurance which provides cover for the policy holder’s lifetime.

This is different to Term Insurance which only provides cover for a specic pre-determined period of time.

With a Whole of Life policy, you needn’t worry about your policy expiring. Some people consider whole of life insurance to be superior to term insurance, for the peace of mind it provides if nothing more.

How It Works?

Whole of life insurance works very simply once it is set up. Each month the policyholder will pay a premium and in return, they will be covered for a set amount of money in the form of a lump sum. When you do pass, your family/dependents will then make a claim and the policy will payout.

There are some policies available which actually allow policyholders to stop paying premiums once they reach a certain age. The cover stays in place, but the policyholder is no longer required to pay.

How To Pay For Whole Life Insurance?

Like any other form of insurance, you will receive a quote to begin with, which states the total amount you will be required to pay each month. This is known as the premium. Payments must be made every month. Missing a payment, or paying late could void your policy, which could be disastrous.

Before taking out whole of life insurance, you must ensure that you can comfortably afford to pay your premiums each month. Most policies require you to pay a fixed amount each month, in return for a fixed amount of cover. These policies are beneficial because they ensure that you know where you stand, right from the beginning. The only downside to this is that, by the time a claim is made on the policy, inflation may have reduced how much the pay out will be worth. However, there can be constructive ways to reduce/eliminate the negative effects of inflation.

What can affect your premiums?

There are a number of variables to consider when it comes to your premiums. A few factors that could affect how much your premiums cost you include:
• Your age
• Your insurance provider
• Your lifestyle habits (smoking, alcohol consumption, excerise etc)
• Medical history/underlying health issues
• The guaranteed lump sum you would like your dependents to receive

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