Whole of life insurance

Upon application, a cover amount is specified and your monthly premiums are calculated accordingly.

Monthly premium payments will then continue for the remainder of your life.

If you stop paying your premiums your cover will cease and your investment wasted.

After you are gone, your beneficiaries can claim on your policy and receive a pay out for the predetermined amount.

Due to a pay out being guaranteed, whole of life insurance tends to be more expensive than term-based cover, but not as costly as an over 50s plan, as the risk to the insurer is known.

All policies provided through Reassured come with fixed monthly premiums, meaning the amount you pay each month will never increase.

Some policies offer reviewable premiums, where the amount you pay may increase if the level of risk you pose to the insurer is deemed to have changed.

This is the most common complaint with regards to whole of life policies, but it is not one you need to worry about if you arrange cover through us.

Occasionally, whole of life policies offer an upper age limit, at which point premium payments will cease (usually around 85-90).

Once you reach this age you will no longer be required to make payments, but your cover will remain valid.

Not all policies provide this and it is more common with over 50s plans, therefore, if this is important to you, it is best discussed at the point of application.

Occasionally whole of life insurance policies will allow you to implement a waiver of premiums.

Whilst this may cost you slightly more, it does ensure that if you were unable to pay your premiums (maybe if you are too ill to work), your cover would remain.

If this is something you require on your whole of life policy, you should discuss it during the application.

Often, in later life, your mortgage and other debts have been paid off, however, a whole of life pay out can ultimately be used for anything your beneficiaries deem fit.

Both whole of life policies and over 50s plans are forms of life assurance, meaning a pay out is guaranteed.

They both cover you for the rest of your life, provided you continue to pay your monthly premiums.

After you are gone, your beneficiaries can use either pay out for whatever they deem fit.

Due to the medical information required, whole of life cover is often better suited to those over 50, who are in good health.

Those in poorer health may find that whole of life premiums are not a cost-effective option.

The key difference is over 50s plans do not require any medical information during the application to be supplied.

Acceptance on an over 50s plan is also guaranteed, whereas whole of life is subject to the medical information you provide.

Whole of life policies generally speaking provide a much larger sum assured, therefore, depending on the coverage you require, this could also affect its suitability.

Whilst it is possible to obtain whole of life cover, which provides an upper age limit for premiums to cease, this tends to be much more common with over 50s plans.

As a result, whole of life policies tend to be better suited to those in the later stages of life, who require a large sum assured and are still in good health.

Whilst whole of life cover may be more time consuming to set up than an over 50s plan, the sum assured available is likely to be significantly higher.

It also offers more flexibility for your beneficiaries than a funeral plan.

For those who are younger and in good health, you are likely to reap the benefits of lower monthly premiums.

Whole of life policies also provide a guaranteed pay out (unlike term-based cover) and there is no expiry date, meaning you will never be required to renew.

Commonly, most whole of life insurance policies now offer terminal illness cover as standard.

This means, if you were diagnosed by a medical professional and given less than 12 months to live, you could claim on your life insurance policy before you die.

In this instance, a pay out could be used to pay for a carer, offer peace of mind that your family is financially stable or simply allow you to enjoy your final days with your loved ones.

When you pass away, by default the value of your whole of life insurance policy forms part of your estate.

However, by writing your whole of life policy in trust it allows you to detach its value from your estate.

This means that not only will your loved ones receive the full amount but that the total amount they pay inheritance tax on will also be reduced.

Writing your whole of life policy in trust also allows your loved ones to avoid the probate process in order to obtain the funds.

This will allow them faster access which is ideal if the cover was put in place to cover the cost of your funeral.

Finally, this process will allow you more control over how the pay out from your policy is distributed.

When you write your whole of life policy in trust you sign over the rights to a trustee who will then carry out your wishes accordingly (although this is at their discretion).

[1] https://www.sunlife.co.uk/siteassets/documents/cost-of-dying/SL-cost-of-dying-report-2020.pdf/