Before receiving whole life insurance quotes this guide sets out the key features of the policy, the options you need to decide upon and the factors that determine the premiums quoted. Alternative life insurance options are also provided such as term assurance and family income benefit.
term assurance policies are.
What is whole of life insurance?
Guaranteed whole of life insurance is a policy specifically designed with family protection in mind. It is a method of guaranteeing that your family will receive a sum when you eventually pass away. Unlike other types of life cover there is no policy term with whole of life cover as the plan continues until the policyholder passes away.
It is in this way that the policy is guaranteed to payout in the end. There is no investment element with a guaranteed ‘maximum cover’ whole life policy and the premiums are guaranteed not to increase for the first 10 years.
In order to gain the most cost-efficient cover it is important to compare whole life insurance quotes from a selection of the UK’s leading providers. Based on your demographic and the sum you wish to insure the quotes provided can vary significantly between insurers.
Key features
- The policy is guaranteed to payout when you pass away.
- Your family are guaranteed to receive the sum that you decide to insure at the start of the policy.
- The payout from the policy can be used for whatever your family decide, whether that be on general living expenses or to cover any future inheritance tax liability.
- Premiums are guaranteed not to increase for the first 10 years.
- The policy can be written into trust to name your beneficiaries and avoid estate inheritance taxation on the payout.
Options for whole life insurance quotes
- Sum to cover: The sum insured is the amount of cover provided by the policy. The amount selected at the start of the policy is the amount that will be paid out when you pass away. In selecting the sum insured you will need to decide how much you would like to leave your family.
- Waiver of premium: For the policy to be valid you will need to keep up with your premium payments. Waiver of premium is an additional policy option that allows you to forgo premium payment if you become totally unable to perform your normal occupation because of illness or injury.
Whether you qualify for waiver of premium will depend on functional assessment tests of basic living, such as walking up stairs. Please note that there is usually an excess period of 26 weeks before the waiver will kick-in. - Premium frequency: It is possible to pay your premiums either monthly or annually, whichever is more convenient to yourself. There is usually a discount if you decide to pay annually as the insurer will receive interest on your up-front payment. Please note that it is also possible to decide which day of the month you would like the premium to be debited from your account.
Factors that determine whole life insurance quotes
Sum Insured
The larger the sum insured the higher the premiums will be. With whole of life insurance the quotes provided are very sensitive to the amount of cover required as the policy is guaranteed to pay out at some point in the future.
Age
Even though whole life policies are guaranteed to payout in the end the premiums are still increasing with age. This is because the insurance company generally has less time to invest the premiums and cover their liability.
Smoker status
The underwriting process attaches a higher risk factor to those who have smoked tobacco products in the last 12 months as smokers tend to die younger which leaves the insurer with less time to invest the premiums and cover their liability.
Alternative policy options
Whole life insurance is specifically for family protection purposes only. If you are looking to cover a potential liability, such as a mortgage or loan, then term assurance would be more appropriate. This is because these types of liabilities are for a specified period of time only, the mortgage term for example.
Term assurance can also be used for family protection purposes but the policy is not guaranteed to payout like with whole of life cover as the policyholder may survive beyond the policy term, which does make the premiums charged cheaper however.
Next steps
As we are completely independent we can provide comparative whole life insurance quotes from the UK’s leading insurers to ensure that you get the most competitive rates possible. If you would like some advice on your policy choices please do not hesitate to contact us.
Whole of life is just one of a number of life insurance products, a useful consumer guide can be found on the Association of British Insurers site and more information regarding the tax position of whole of life policies can be found at the HMRC.
