There are 2 main types of life cover;
1. Term Insurance – this is the most common and is often used in connection to mortgages. It pays out a regular income or a lump sum should you die during the term of the policy.
2. Whole of Life Assurance – designed to pay out a sum of money to a person’s family or estate upon the death of the life insured.
Here we will focus on Whole of Life cover.
Whole of Life Cover
A Whole of Life plan is designed to pay out a lump sum to the deceased’s estate upon death no matter when that is. This type of policy is most commonly taken out to cover funeral costs, to provide a lump sum for loved ones or to cover an Inheritance Tax bill.
Usually a minimum payment on death is specified at outset however unit-linked whole of life policies can be anything over and above as this depends on the value of the unitised funds you are invested in, or the bonus payments received if it is a with-profits policy.
It is possible to surrender the policy however, doing so may mean that you may not get back as much as you have invested into the plan. There may also be penalties/charges to discontinue the plan so you should consider your options carefully. Once the plan has been terminated, it cannot be reinstated. A new Whole of Life plan would have to be set up should you decide you want cover again in the future. It is also highly likely that the premiums be more expensive in the future.
If you would like to know more about Whole of Life cover, life cover in general or you’d like to see a Financial Adviser, please complete the form below and we will get back to you as soon as we can.
Please note that we do not give financial advice over the telephone