It’s never a pleasant thought, but sadly all of us will die. While we can’t prevent death, we can plan for it by taking out life insurance cover. Whole life insurance in particular assures us that our loved ones will be protected for any difficult times ahead.

Most of us will be faced with a decision as to whether or not to buy life insurance. While you may feel like life insurance is expensive and unnecessary, it’s an option you cannot afford to dismiss right away.

What is whole life insurance?


Whole life insurance is a type of life insurance policy that provides you with cover for the remainder of your life. It goes under other names by insurers, most notably  ‘whole of life insurance’ or ‘life assurance’.

When you die, your loved ones receive a lump sum payment - known as the policy pay-out. Unlike term life insurance, this type of cover pays out no matter when you die. Therefore, your family is guaranteed financial support when you are no longer there to provide for them.

Like all types of life insurance, when you take out a policy you begin making monthly premium payments to your provider. If you fail to pay your premiums, your cover will end.

How does it work?


Whole life insurance has three forms of cover:

  • Balanced cover - The standard type of whole life cover. The cost of your premiums remains the same throughout the policy. The cash sum from the eventual payout is also fixed.
     

  • With-profits - Your policy is linked to an investment fund, paid into by your insurance provider. Each month they invest the money from your premiums to make a return that will cover the eventual pay-out. 

    If the investment performs well, you can receive bonuses that get added to your policy. The flip side is that if it fails, your premiums could be increased to cover the loss.
     

  • Unit linked cover - Similar to with-profits except you get to choose the investments your premiums are paid into.

Get a quick Whole Life quote now, call: 

01392 241 850

Why should I buy whole life insurance?


One thing that is certain in life - death is unpredictable. Many of us are faced with the decision as to whether or not we should buy life insurance. One of the sure ways to determine whether you may need cover is by assessing your family’s financial situation.

Ask yourself these questions - how would my death impact my family’s finances? Are there any financial burdens that they would otherwise struggle to pay off,  such as a mortgage?

Here are just some of the reasons why you may want to buy a whole life policy:

1. Protect your family’s finances

None of us wants to leave our family with any financial burdens. If you are the main provider for your household, you may be more likely to need life insurance.

The pay-out from a whole life insurance policy can support your family with finances, such as:

  • Household bills
     

  • Everyday living expenses
     

  • Rent or mortgage repayments
     

  • Childcare support
     

  • Funeral expenses

2. Provides permanent cover

One of the significant differences between whole life insurance and term life insurance is the policy length. While term life insurance is typically cheaper, it only provides cover for a set period of time (i.e. 20 years). You can learn all about the difference between the pair in the article - Whole and term life insurance: which is better?

Whole life insurance, on the other hand, ensures a pay-out no matter if you die in 3 years or 30. Though the cost is greater, the peace of mind it offers to you and your loved ones is priceless.

3. Support your children’s future

One of the many joys of parenthood is giving your children a helping hand when they need it most. Even if you were to pass away before your children grow up, you can still support them. 

For young adults, life can be very expensive, whether that be going to university, travelling, buying their first car or house or even starting a family of their own. That’s where the pay-out from a whole life policy can provide them with a brighter future.

 

4. You can get a joint policy

A benefit of whole life insurance is that you can get a joint policy - this provides cover for two people under a single policy. Many couples find this a cheaper alternative than two single policies as well as being easier to manage.

Joint policies are most suitable for:

  • Spouses
     

  • Long-term partners
     

  • Business partners

Joint policies typically work on a first death basis - this means the policy pays out after the first death of a policyholder. The policy then ends meaning the surviving member would need to get additional cover if required.

5. Can be used in estate planning

When you die the lump sum from the policy is added to your estate - which is then passed on to your selected beneficiaries. Your estate is made of everything you own - i.e properties, cars, jewellery and investments like life insurance. Though whole life insurance is technically tax-free - it may be taxable under inheritance tax. 

If the value of your estate is greater than the inheritance tax threshold (£325,000), it will be taxed 40% [1]. The best way to protect your whole life policy from inheritance tax is by writing your policy in a trust. This is a legal arrangement, set up by the policyholder to hold assets for third parties.

If you are unsure about whether to use a trust or not, we recommend that you seek legal advice or speak to a solicitor.

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How much does whole life insurance cost?

As one of the more expensive types of life cover, the cost of whole life insurance depends on several factors. When applying for life insurance, your provider will ask you some health and lifestyle questions, typically regarding your:

  • Age
     

  • Health
     

  • Occupation
     

  • Smoker status

All of these factors can increase or reduce the cost of your policy (with age and health being the major two). With life insurance, the key is to take out cover at the earliest stage when cover is cheapest.

Unfortunately, as we get older, we run a greater risk of developing medical conditions and even death. Therefore the cost of cover rises significantly.

Get a quote today!

At Cavendish Online, we are dedicated to helping you find the best life insurance cover, for the best prices in the UK. With several options available you can compare term life insurance quotes in minutes by filling out our easy-to-use online form.

Speak to the experts...

Give our advisers a call today.

Our team of friendly and professional advisers are on hand to help with any questions you may have regarding Life Insurance.

The advisers can also make recommendations tailored to your current situation and will research the market on your behalf, ensuring you secure the cover you need and supporting you every step of the way. 


01392 43 61 93(Monday to Friday, 9am - 5.30pm)

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