A whole of life policy is another policy which does exactly as it says. It covers you for the whole of your life. When the inevitable happens, providing the policy is still in force, it will pay out a death benefit. Although they can provide a surrender value, they should not be used for investment purposes due to the deductions made for the death benefit.
As payment of the benefit is inevitable Whole of Life policies tend to be more expensive than Term Assurance policies for the same level of cover (it depends on what age you are when you start the plan). Each premium is made up of a mortality element and a savings element. Upon death, a fixed sum is paid to the beneficiary along with the balance of the savings element. The performance of the underlying investment fund for Whole of Life Plans is important, as the cost of future premiums depends on fund performance.
These policies come in various forms:
Non-profit whole life policies - A level premium payable throughout life. It pays a fixed cash sum at the time of death.
With profit whole life policies - Same as non-profit policies but the amount paid on death is the sum assured plus whatever profits have been allocated.
Low cost whole life policies - These have a guaranteed level of cover that the amount payable on death is the greater of the basic sum plus bonuses or the guaranteed death sum assured.
If you are worried about investment risk and increasing premiums, there are Whole of Life policies available which do not rely on fund performance, however, these do not acquire a surrender value.
Please be aware that in some cases this type of assurance is based on an assessment of the health of the applicant.
Whole of Life Policies
A whole of life policy is another policy which does exactly as it says. It covers you for the whole of your life. When the inevitable happens, providing the policy is still in force, it will pay out a death benefit. Although they can provide a surrender value, they should not be used for investment purposes due to the deductions made for the death benefit.
As payment of the benefit is inevitable Whole of Life policies tend to be more expensive than Term Assurance policies for the same level of cover (it depends on what age you are when you start the plan). Each premium is made up of a mortality element and a savings element. Upon death, a fixed sum is paid to the beneficiary along with the balance of the savings element. The performance of the underlying investment fund for Whole of Life Plans is important, as the cost of future premiums depends on fund performance.
These policies come in various forms:
Non-profit whole life policies - A level premium payable throughout life. It pays a fixed cash sum at the time of death.
With profit whole life policies - Same as non-profit policies but the amount paid on death is the sum assured plus whatever profits have been allocated.
Low cost whole life policies - These have a guaranteed level of cover that the amount payable on death is the greater of the basic sum plus bonuses or the guaranteed death sum assured.
If you are worried about investment risk and increasing premiums, there are Whole of Life policies available which do not rely on fund performance, however, these do not acquire a surrender value.
Please be aware that in some cases this type of assurance is based on an assessment of the health of the applicant.
Pedr Financial Planning is an appointed representative of TenetConnect, which is authorised and regulated by the Financial Conduct Authority. TenetConnect is entered on the Financial Services Register (www.FCA.org.uk) under reference 149826. Registered office: 20 High Street, Lampeter, Ceredigion, Wales, SA48 7BG. Registered in England & Wales: 07048010.
The Financial Ombudsman Service is available to mediate individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit: http://www.financial-ombudsman.org.uk/contact/index.html
The guidance provided within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
