Whole Life Insurance

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Whole Life Insurance

Tom Fisher joins us to talk about whole life insurance.

What is a whole life insurance policy and how does it work?

Whole life insurance is a type of permanent life insurance, which means that the insured person is covered for the duration of their life. The cover lasts forever, as long as the premiums are paid on time.

Which life insurance is better? Term or whole life?

They are just different. Term life insurance tends to be cheaper than whole life insurance because your cover only lasts for a certain period of time. Because whole life insurance lasts your entire lifetime, you’ll often pay more on a monthly basis as the payout is guaranteed.

What types of whole life policies are there?

There are two main types known as balanced cover and maximum cover. With balanced or standard whole of life insurance, the premiums will stay the same and you will have a fixed cash payout amount. 

Meanwhile, maximum cover is linked to an investment fund. Your premiums will be reviewed and can change depending on how the investments are performing. 

Whole life insurance can be used for a number of purposes. One of the most common is to contribute towards funeral expenses. That pays a lump sum to your loved ones to help take care of the cost of a funeral.

Are whole life policies worth it? What are the advantages and disadvantages?

There are certainly pros and cons. A key benefit of whole life is that it’s considered a permanent life insurance policy. It’s meant to provide you with a lifetime of protection with premiums that won’t increase, won’t expire after a specific number of years, and the policy can’t be cancelled due to health or illness. 

The main disadvantage is that it’s more expensive than term life insurance. It is best to take it out when you’re younger, to have more affordable premiums. In addition, you are unable to amend a whole life policy. So if your protection needs change as your life changes, you’ll have to start a new policy.

Can I get a joint whole of life insurance policy?

You can, and it will pay out on the first death. So if there are two people on the policy, when the first person passes, the money will go to the other person.

How much is whole of life insurance? Does this vary?

There is no specific cost. It really depends on how much cover you’re looking for. But it does factor in things like height and weight, your age, your smoking status, plus any medical conditions that can affect the monthly premium.

How much could a policy payout? And is it guaranteed to pay out?

As long as the client keeps paying their monthly premiums, a standard whole of life policy will pay out the sum assured. The policyholder only pays their premiums up to the age of 90. If they are fortunate enough to live past 90, there are no more premiums, but they will continue to be covered until death.

How can I get whole life insurance and how can a mortgage broker like Assured FG help?

It is possible to go directly to the provider, but it tends to be a bit more expensive. Providers pay insurance brokers to sell the policies, which means that brokers get preferential rates. A mortgage broker can help you but they tend to be solely tied to a couple of providers, whereas a standard insurance broker does cover the whole UK market. So essentially, it’s better to go to a standard broker rather than a mortgage broker.

Whole life insurance is often bought in line with things like a mortgage because you want the policy to pay out if you die. As we’ve seen, you pay premiums up to the age of 90. If you’re fortunate enough to live past the age of 90, the policy will continue without any payment required until you pass away.