Whole of Life Insurance

Whole of life insurance is a type of life insurance that provides cover for the insured person's entire life. The main purpose of whole of life insurance is to provide financial protection for your loved ones in the event of your death.

Whole of life insurance can be an important part of your financial planning, providing peace of mind that your loved ones will be taken care of financially if you die. It can also be used to help with inheritance tax planning, as the lump sum life insurance pays out on death is usually exempt from inheritance tax.

If you are considering taking out whole of life cover, it is important to compare different policies and make sure you understand the terms and conditions. You should also speak to an expert to get advice on the best policy for your needs.

At Echo Finance, we can help you find the best whole of life cover for your needs and provide expert advice on inheritance tax planning. Contact us today to speak to one of our advisors.

What is whole of life insurance?

Also known as life assurance, whole of life cover is a type of policy that covers you for your entire life, provided you continue to pay the premiums. Whole of life insurance can be an expensive way to insure yourself, but it does offer peace of mind knowing that your family will be taken care of financially if you die.

How does whole of life insurance work?

Whole of life cover works by you paying regular premiums to the insurer. In return, the insurer will pay out a lump sum to your beneficiaries in the event of your death.

The size of the payout will depend on the level of cover you have chosen and the amount you have paid in premiums. It is important to note that whole of life insurance does not have a fixed term and will continue to cover you until you die.

Who is whole life insurance for?

This type of life insurance policy is best suited to:

• People who want to leave a financial legacy for their loved ones
• People who are planning for inheritance tax
• Those who are looking for peace of mind that their family will be taken care of financially if they die.

How is whole life insurance different from term life insurance?

Whole of life insurance and term life insurance are two of the most common types of life insurance policies. Here is a quick overview of the key differences between the two:

• A whole of life insurance policy will cover you for your entire life, whereas term life insurance only covers you for a set period of time (usually between 1 and 30 years).
• Whole of life insurance has no fixed term, which means that you will continue to pay premiums until you die. Term life insurance only requires premiums to be paid for the set term of the policy.
• Whole of life insurance typically has higher premiums than term life insurance.
• Typically a whole of life insurance policy pays out a larger sum than term life insurance, as it is designed to provide cover for your entire life.
• Whole life insurance features a type of investment account known as a 'cash value' account. This account grows over time and can be used to pay premiums or borrowed against in the future. Term life insurance does not have a cash value account.

Choosing the right life insurance policy is an important decision. Be sure to compare different policies and speak to an expert before making a decision.

What are the benefits of whole of life insurance?

Whole of life cover can offer numerous benefits, including:

• Peace of mind: Knowing that your family will be taken care of financially if you die can provide peace of mind and security.
• Inheritance tax planning: Whole of life insurance can be used to help with inheritance tax planning. The lump sum from the policy is tax free and can be used to pay any inheritance tax bill due.
• Flexibility: Whole of life insurance cover typically offers more flexibility than other types of life insurance. For example, you may be able to choose how much cover you need and how long you want the policy to last.

Why is a life assurance policy more expensive?

A life assurance policy is more expensive than a term life insurance policy for several reasons:

Lifelong protection

Unlike term life insurance, which only covers you for a set period of time, whole of life insurance provides cover for your whole life. This means that the insurer is taking on more risk by offering you this type of policy.

The cash value account

Whole of life insurance policies typically have a cash value account attached to them. This account grows over time and can be used to pay premiums or borrowed against in the future. The insurer will invest money into this account, which adds to the overall cost of the policy.

Loans against the account

You may be able to take out a loan against the cash value account attached to your whole of life insurance policy, which can cover you in an emergency. This loan will need to be repaid with interest, which adds to the cost of the policy.

Withdrawals from the account

You may also be able to make withdrawals from the cash value account. This money may be taxed as income if it's more than you've paid in premiums, which can add to the cost of the policy.

Dividend potential

Some mutual insurance companies may elect to pay you a bonus if the company performs well financially. This bonus, known as a dividend, is not guaranteed and will depend on the company's performance.

Premiums paid for with earnings

You may be able to use the earnings from your policy to cover the premiums, although this will reduce the lump sum payment to your beneficiaries.

How much does whole of life insurance cost?

The cost of whole of life insurance will depend on a number of factors, including your age, health, lifestyle and the level of cover you need. Generally speaking, the older you are and the higher the level of cover you need, the more expensive the policy will be. If you are considering taking out whole of life insurance, it is important to compare different policies and make sure you understand the costs involved. It is also a good idea to speak to an expert before making a decision.

Here are some things to consider when taking out whole of life insurance:

The level of cover you need

The amount of cover you need will depend on your personal circumstances. You'll need to consider things like your debts, mortgage, dependents and other financial commitments.

Your age and health

Your age and health are two of the biggest factors that will affect the cost of your policy. The older you are, the more expensive the policy will be. If you have any health conditions, this may also affect the cost of cover.

Your lifestyle

Your lifestyle choices can also affect the cost of your policy. Things like smoking, drinking and dangerous hobbies can all add to the price.

The type of policy you choose

Whether you choose a with-profit or non-profit policy will also affect the cost. With-profit policies typically have higher premiums but offer the potential for bonuses, while non-profit policies have lower premiums but no bonus potential.

How long you need cover for

The length of time you need cover for will also affect the cost. If you only need cover for a few years, then a term life insurance policy may be more suitable. If you need cover for life, then a whole of life insurance policy will be more expensive.

Your insurer

The insurer you choose can also affect the cost of your policy. Some insurers offer discounts for things like having no claims or being a non-smoker. It's important to compare policies from different insurers to make sure you're getting the best deal.

Speak to an expert

Whole of life insurance is a type of permanent life insurance that provides coverage for your entire life. The death benefit is paid out regardless of when you die. Whole life insurance also has a cash value account attached to it that grows over time. You may be able to borrow against this account or make withdrawals from it, but this will add to the cost of the policy.

Whole life insurance is more expensive than term life insurance, but it offers lifelong coverage and a cash value account that can be used in retirement.

If you're considering taking out whole of life insurance, it's a good idea to speak to an expert. They can help you understand the different policy options and find the right one for you. At Echo Finance, our team can help you to compare different whole life insurance policies and find the best one for your needs. Get in touch today to get started.