ABOUT Whole of Life Cover
Whole of life insurance is a life insurance policy that guarantees the family of a policy holder gets a pay out in case of death. All things being equal if premium is paid it gives peace of mind that a policyholder’s loved ones will have financial security.
Unlike term life insurance, which has a policy end date, whole of life insurance only ends when the policyholder dies, hence the pay-out is guaranteed.
How Whole of Life Insurance Works
- When you take out a policy, you will pay a premium either monthly or annually. There is flexibility of how you pay for your cover in the best way that suits you. You can also choose your future premiums calculations.
- Your sum assured remains the same throughout your life which is payable to your dependants and beneficiaries. For example, if you are assured for £500,000 at the start of the policy, your family will receive £500,000 when you die irrespective of when death occurs.
Benefits of Whole of Life Policy
- It gives peace of mind that your loved ones will get a pay-out when you die.
- It can provide your loved one with cash sum to help pay the bills and replace your lost income after death.
- It provides a lump sum to pay for your funeral and to pay off loans.
- The average cost of a funeral is around £8,500. This can provide the peace of mind that the assured loved ones will not be left with this bill to pay after the assured’s demise.
- Your plans value can be a source of tax-free funds during your lifetime.
- It provides a lump sum to pay an Inheritance Tax bill
- This could mean that assets which could include the family home do not have to be sold to realise the cash required to pay the Inheritance Tax. The Inheritance Tax rate is 40% and this is charged on all estate assets in excess of the nil rate band, which is currently £325,000 for a single person.