Life Assurance beginners guide part 3- Whole of Life Policies

Whole of life policies can potentially cover you for the WHOLE of your life, ie there is no set maturity/expiry date, these can provide very extensive cover and can have many additional options attaching to them, but they will get more expensive over the years......

Similarly to the decreasing or level term type policies, you nominate the level of cover you wish to have. The premium will depend upon underwriting where your age, health, smoker status etc will be taken into account. The term of your policy is not limited, its open ended, hence 'whole of life', but be aware that the premium you pay at the start is not guaranteed, the life company will carry out reviews on the policy at predetermined intervals, every 5 years, or annually after age 70 for example.

At the review the company can ask you to pay a higher premium for the same level of cover for the period until your next review. In fact its inevitable that the premium will rise over the years, as one gets older, the risk increases.

So whats the benefit of Whole of life policies?

• They can provide very comprehensive cover for your family.
• Once your policy is in force and you continue to pay the premiums you will stay on cover. It wont expire after a set length of time. 
• In the event of deteriorating health you may find it hard or impossible to get life cover, with a whole of life policy this is not an issue.
• There are many additional added cover options, hospital cash/surgical cash/critical illness cover.
• These policies may build up a surrender value over time.
• They can be assigned to your lender as security against a loan/mortgage.
• They are flexible, you have the option to reduce cover when you need to.

So while they may be an expensive type of policy in the long run, they do provide great peace of mind that as long as you continue to pay the premium, you will be leaving a tax free lump sum in the event of your death to your next of Kin.

FS