Looking for the cheapest Whole of Life insurance can be a minefield; we listen to your needs and present the right Whole of life policy for you. Without Whole of life insurance your estate and beneficiaries may be more inheritance tax than they would without the protection of a Whole of Life policy?
What is whole of life insurance?
Whole of life insurance guarantees that an insurance provider will pay out a lump sum to your family or beneficiaries whenever you die, so long as you continue to pay your premiums. It is for this reason that it is generally more expensive than other term life insurance, which will only pay out if you die during the term of the policy.
What different types of whole of life insurance are available?
Whole of life insurance usually falls into two categories, maximum cover, and balanced cover.
A maximum cover policy is linked to an investment fund where the insurer invests the money you pay for your premium each month. This is with the aim of generating returns from the investment that will be sufficient to cover the cost of the pay-out.
Premiums for this type of policy are reviewed periodically and if the investment is not performing well, your cover may be changed, or they may increase your monthly premiums. So, while this type of policy may be cheaper initially, it can become more expensive throughout the duration of the policy.
A balanced cover policy (or standard) will mean that your premiums remain the same throughout the life of the policy, even when you get older or if your health deteriorates. The sum you are insured for will also remain the same throughout.
Do I need whole of life insurance?
Generally, whole of life insurance policies are taken out to cover an inheritance tax bill. As it stands, if your estate is worth over £325,000, inheritance tax will be charged at 40% on the value of your estate above that threshold. Currently, your loved ones will have to pay the inheritance tax bill before they are given access to the estate, which can put families in a difficult position.
A whole of life insurance policy, written in trust, can be a great way to avoid this issue. This way, you can keep it separate from the rest of your estate and the pay-out provides the funds needed to pay the inheritance tax bill when it becomes due.
Whole of life insurance policies can also be a great way to leave money to your loved ones or go towards the cost of your funeral arrangements.
How much does whole of life insurance cost?
Whole of life insurance is generally more expensive that term life insurance as it is guaranteed to pay out at some point, providing that you keep paying the premiums. Some of the things that can impact the price you pay for whole of life insurance are as follows:
Your age: in general, the younger you are when you take out the policy, the cheaper the premiums will be
Your medical history: lifestyle factors such as smoking can make your premiums more expensive as well as any existing health conditions
The amount of cover you would like: the more cover you want, the more expensive it is going to be
It is important to remember that you will need to keep paying the premiums until you die or reach a certain age with some policies. It is therefore important to consider whether you will still be able to afford the premiums once you stop working.
Things to consider before taking out whole of life insurance
There are many important decisions to make when taking out whole of life insurance and some of the questions you should think about are:
How much cover do I need?
Do I want my premiums to remain consistent or am I happy that they may change in the future?
Do I have any existing policies in place already?
Should I place my whole of life insurance policy in trust?
Woodward Financials were awarded best wealth management firm in 2021 and again in 2022 and have a team of advisers ready to help you answer these questions and guide you through the right whole of life insurance policy for you and your family.
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