Permanent life insurance is another name for a whole of life policy, such a plan is not defined by a time period and as long as you continue to pay your premiums it will guarantee a pay out on death.
term assurance policies are.
Why permanent life insurance?
We all tend to consider our financial protection at important stages in our lives, the first protection we tend to consider is life insurance but there are a range of life policies available. The most common is term assurance which covers you for a set time period, this is great if you want to cover a specific mortgage or other loan which has a shelf life, but what if you want to guarantee a cash sum to your loved ones should the worst happen?
A term assurance policy is limited as on commencement of the policy you will need to define the length of cover, if you survive this period the policy terminates and there is no payout. A whole of life insurance policy differs as it is not defined by a time period like the term plans, you set the level of cover you require at the beginning of the policy and as long as you continue to pay your premiums until the inevitable day comes then you are guaranteed to leave a lump sum to your loved ones.
Insurance only product
If structured correctly and placed in trust the policy will provide a tax free cash lump sum to your beneficiaries which they can use for whatever they require, paying off your outstanding debts, funeral costs or just to cover their monthly financial obligations during difficult times.
The permanent life insurance policies we advise on are insurance products, there is no investment element, if you choose to cover £115,000 you will receive a payout of £115,000. There are other types of whole of life insurance available which are linked to investments but these are not products we provide a service for. With a permanent life insurance policy you can expect to pay higher premiums than those of a term assurance plan with the same level of cover as the product is certain to pay out.
Factors to consider when buying whole of life cover?
- Do you want your policy to last the whole of your life with a guaranteed payout to your family upon death?
- What tax-free sum would be required to financially protect your family?
- Do you require the permanent life insurance cover to be index-linked so it rises with inflation?
Next Steps
Whether you require some more information, want to discuss your situation or simply want a quote we are here to help. Another useful insurance resource can be found in the Financial Services Authority – Money Made Clear site.
