What are the Benefits of Whole of Life Insurance?

Whole of life insurance is generally a more expensive form of life cover, but it can bring a number of benefits should you pass away and your loved ones need support. Essentially, whole of life insurance is designed to last as long as you do, but many people choose to invest in level term insurance instead.

Whole of life vs level term

Whole of life insurance will last for your lifetime, while level term insurance only lasts for a set period of time that you decide on. Most level term insurance policies will last around 25 years.

If you were to pass away after the term ends, there is no pay-out and you will not get return on the premiums you have paid. You will likely need to take out a new policy to cover you for subsequent years. However, whole of life insurance will guarantee a pay-out to your family as it literally covers you for the entirety of your life.

For this reason, many believe whole of life insurance can provide stability and reassurance when you are hoping to look after your family from a financial standpoint.

Use whole of life insurance for inheritance tax

One of the biggest reasons people take out whole of life insurance is to help your family deal with inheritance tax. If your estate is worth more than £325,000, you will be taxed 40% on the value above that threshold.

The problem with inheritance tax is that it needs to be paid before your family gain access to the estate. This can put many families in a difficult financial position, with some not able to afford the tax bill, which can run into the thousands.

You can take out a whole of life policy and write it under trust, meaning your beneficiaries can receive a lump sum in order to pay the inheritance tax bill.

Alternatively, by writing the policy in trust, the pay-out will go directly into a trust to be paid when the recipient reaches a certain age. This can help you to bypass the inheritance tax threshold altogether.

Protection for life

Whole of life insurance policies offer you protection for life. The policy will not expire, or go down in value. What is more, while your premiums may be more expensive than with other policies, the cost will never increase.

The cost of your whole of life insurance can depend on your age, health and other lifestyle factors. The higher risk you are deemed to be, the higher your premiums may cost you.

Depending on the provider, you can set up whole of life policy from the age of 18. If you want to ensure your loved ones have an inheritance when you pass, or they have access to finance to pay for funeral costs and living rooms, whole of life insurance offers that opportunity.

Whole of life cover can help to accommodate for any eventuality, and can be priceless in providing much-needed help and support to your loved ones. To find out more, get in touch.