A whole of life policy is a type of life insurance policy. It provides a form of financial protection for the entire lifetime of the policy as long as the premiums are paid.
A whole of life policy is a little but unique in how it works. It can be quite a specialist product and although is unlikely to be a mainstream product like Term Assurance, it certainly has its place.
If we looks at how it works and some of its features, you might be able to determine if this is what you need. Sadly we do not provide a carriage clock like some of the policies but we are whole of market so can look at multiple insurers to ensure the best policy for you.
Guaranteed Pay out
A Whole of Life policy ensures that your beneficiaries will receive a lump sum payment upon death of the policyholder, regardless of when it occurs. Nice and simple, in that assuming you have told the truth on the health questions and you pay the premiums, it will pay out.
This has an advantage over a term life insurance policy, which only pays out if you pass away during the policy term. Not many insurance policies offer the same guarantee.
However, it is important to note that this obviously comes at a cost.
Financial Security for Loved Ones
Following on from the guaranteed pay out, it provides a guarantee to loved ones. Like most life insurance policies the pay out can be used for anything. Although I think its most common use is to pay for/towards funeral costs. However it can be used for tax purposes and the like.
Legacy Planning
Whole of life policies can be used to leave a financial legacy for your heirs. This can be particularly important for those looking to ensure their family’s financial stability or to fund future expenses like education.
As mentioned above, these policies can be set up to cover tax liabilities to ensure next of kin or survivors of the estate are not burdened with the cost of inheritance tax.
Cash Value Accumulation
Whole of life policies often build cash value over time, which you can borrow against or withdraw from if needed. This can serve as a financial resource during your lifetime.
Premiums can increase as the policy holder ages. This can mean that you can reduce your premiums and use any built up value for a period although its important to note that this can go quite quickly in the latter years as the premiums rise.
Business Protection
Whole of life policies are not just for personal use. If you own a business, a whole of life policy can be used to protect the business and other shareholders by ensuring that funds are available to buy out a deceased partner’s share or to cover other business-related expense. This is normally done at the time of setting up a cross option agreement or similar.
Whole of Life set up summary
Most life policies including a Whole of life policy can be tailored to your specific needs.
Whether it is for business or personal use, we can look at both. They can be placed in trust if needs be and we can of course help with that.
Knowing that your loved ones or business partners will be financially secure can provide significant emotional comfort allowing you to focus on enjoying life without worrying about the future.
Whole of life policies can be a valuable part of a comprehensive financial plan.