What is whole of life insurance?
As the name implies, whole of life insurance is a form of assurance which provides cover for the policy holder’s lifetime. You see, term insurance only provides cover for a specific pre-determined period of time. With that type of cover, you needn’t worry about your policy expiring. Many 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. Each month the policy holder 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 assurance policy will pay out. There are some policies out there which actually allow policy holders to stop paying premiums once they reach a certain age. The cover stays in place, but the policy holder is no longer required to pay.
How to pay for whole of life insurance cover
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 right where you stand from the beginning. The only downside to this is that, by the time a claim is made on the policy, inflation will have reduced how much the pay out will be worth.
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 (whether you smoke, drink excessively etc)
• Underlying health issues
• The guaranteed lump sum you wish for your dependents to receive